Last year, 225 million people used a ride sharing app in China. The biggest winner in the battle for these billions of rides has been Didi Chuxing – especially since they absorbed the local operation of Uber in 2016, when Uber decided to step away from the Chinese market.
But some new market entrants are trying to fight Didi and there is an interesting new dynamic, price is no longer the key factor for customers deciding which ride-sharing app to use. Just this month, Ctrip, the largest online travel service in China, was offered a license for a ride-sharing service.
Ctrip aims to offer a full range of travel services, including the short journeys that have been dominated by Didi. The Ctrip idea is to offer flights, hotel reservations, tours, and short journeys all in one place.
But Ctrip is not the only rival causing a potential headache for Didi. Meituan Dianping recently launched an alternative service, even though it appeared that Didi would take complete control of the market after absorbing the customers of Uber.
The battle between Uber and Didi was largely focused on price. For several years they both spent heavily on building up a larger customer base, with a focus on offering the best value. Now that Didi dominates this section of the market, the new market entrants are trying to focus on service rather than price alone. They cannot undercut the rates offered by Didi, but they all believe that some customers will pay more for a better customer experience.
In a statement released earlier this month, the chief executive of Ctrip’s chauffeur car service unit Li Qiao said there was huge untapped potential in China’s ride-hailing market. “Now the focus of competition in ride-hailing has shifted from price to service. Users are more willing to pay for good service. Using subsidies may lower the quality of service and eventually lose customers,” Mr Li said.
Customer safety is another major concern for many customers, particularly women. Women have used social networks in China to complain about sexual harassment by Didi drivers and several complaints have gone viral. Didi has fought back, but the new market entrants are clearly aiming their service at customers who want quality and guaranteed safety – even if the price is higher.
Didi remains the dominant company in this area, but in 2016 it looked as if no other company could enter – if the global giant Uber could not fight them then who could? It seems the answer is for smaller companies to enter and pick out specific niche areas where customers are happy to pay more for a better experience. The focus for ride sharing in China is now the customer experience – a lot has changed in just two years.