Didi Kuaidi, China’s leading taxi-booking app which is jointly backed by Tencent and Alibaba, has decided to call a halt to its aggressive expansion in Hong Kong until the government becomes more receptive to online cab booking service, sources said.
Uber, whose head office in Hong Kong was raided by the city’s police and several of its employees and drivers arrested in August, seems to be cutting back its promotion activities as well.
After having operated in Hong Kong for almost one and a half years, Didi Kuaidi decided that the investment period is over, the sources said.
With business reaching a certain volume and stabilizing, the company will stop its intense, cash-burning marketing activities for the time being until the administration adjusts its policy towards this fledgling business model.
The spokesperson from the DidiKuaidi Hong Kong has declined to comment.
Dr. Hung Wing-tat, an associate professor at the Department of Civil and Environmental Engineering of the Hong Kong Polytechnic University, said the recent cuts on driver subsidies indicated that Uber could be in gradual retreat.
Hung said the operating environment in Hong Kong is unlikely to improve in the short to medium term, as there are no signs that the government is going to relax its restrictions on taxi-hailing apps anytime soon, despite the huge demand for the service.
Some Uber drivers have revealed that since the police raid in August the company has gradually trimmed its subsidies for drivers.
For example, they used to get a referral bonus of HK$3,000 (US$387) for each new driver, but now the bonus is only HK$1,000. Uber has also stopped guaranteeing its drivers a daily minimum income of HK$1,800 for 14 orders.
With this and other subsidy cutbacks, some drivers complain that they could hardly break even after deducting a 20 percent commission fee paid to Uber.
A spokesperson for Uber Hong Kong has denied the company is withdrawing from the city, saying that providing subsidies for drivers is only a temporary measure, and is subject to periodical review in order to suit ever-changing customer needs.
This article appeared in the Hong Kong Economic Journal on Oct. 27.
Translation by Alan Lee
[Chinese version 中文版]
– Contact us at [email protected]