Date
23 September 2018
Ride-hailing giant Didi Chuxing has come under fire from Chinese authorities after another rape-murder incident involving a driver and a female passenger.  Photo: Reuters
Ride-hailing giant Didi Chuxing has come under fire from Chinese authorities after another rape-murder incident involving a driver and a female passenger. Photo: Reuters

Didi has a crisis on its hands

Didi Chuxing, China’s top ride-hailing services firm, is facing heat from authorities in the wake of another shocking crime involving a driver and a female passenger.

News that a 20-year-old woman was found raped and killed after she availed of a Didi car-pooling service in Wenzhou last Friday has led to fresh questions about the Beijing-based startup’s driver check systems and controls.

With the latest crime happening barely three months after another terrible incident in May, when a flight attendant was killed by a driver in Zhengzhou, Didi is perhaps confronted with its biggest crisis ever since it was founded six years ago.

Amid a public outcry over the rape-murder cases, authorities in several Chinese cities, including Beijing, Shanghai, Guangzhou and Shenzhen, have summoned Didi executives and are demanding answers on the issue of passenger safety, mainland media have reported. 

According to Caixin online news portal, Shanghai transport authorities have even challenged the legitimacy of Didi’s carpool service Hitch, which was at the center of last Friday’s incident.

Didi never registered its Hitch service in Shanghai, rendering the local operation illegal, officials were quoted as saying.

Following the crime incidents, the Shanghai municipal government is said to be drafting new rules to punish or suspend operations of ride-hailing firms that have a record of repeated lapses.

Meanwhile, local governments in many other cities are also putting Didi under heightened scrutiny in relation to its operational practices and security measures.

Didi announced on Sunday that it was suspending the Hitch service as undertakes a review of the operations. 

After apologizing to the public, the company vowed to put in place a new compliance system that would ensure better background checks on its drivers and provide improved passenger safety.

The company can’t afford to take it easy, given the huge backlash it has faced from society in the wake of the gruesome passenger murders. On online forums, netizens have even called for deletion of the Didi app from mobile devices, a reflection of the public anger over the recent incidents.

Reacting to the fresh case last week, China’s transport ministry said Didi had “unshirkable responsibility” for the woman’s death.

For Didi, there is a lot at stake, and it certainly needs to conduct a serious review of its operations to ensure a safe service for all passengers.

The ride-hailing giant needs to get its act together fast, especially given its reported plans for an initial public offering, possibly in 2019. Media reports have said earlier this year that Didi was targeting a valuation of at least US$80 billion for its proposed listing.

The firm was said to have been valued at US$56 billion when it completed a funding round last December, with saw Japan’s Softbank pitching in some capital, among other investors.

Now, the suspension of the Hitch service and the possibility of tighter regulations, which could mean additional spending on passenger security-related measures, could affect Didi’s valuation, unless the company proves it can resolve its problems quickly.   

Didi needs to tighten oversight on its service providers, namely drivers, if it wants to avoid bad press again. The recent crime incidents showed that Didi’s internal service control mechanism failed to monitor the drivers effectively, and that the company may have even been in a position where it was unable to contact the drivers when the latter were providing the services.

Didi is required to enter information on all its vehicles and drivers into a government-supervised platform for ride-hailing operations. But the firm has so far submitted data on only a minor fraction of the drivers operating on its platform, Caixin noted, citing transport ministry data.

Apart from stronger background checks and data gathering on drivers, Didi also needs to improve its crisis management and public relations strategies.   

Observers have noted that after both the recent passenger death incidents, Didi’s top executives failed to speak to the public, opting instead to stay behind the curtains. Didi is led by its founder Cheng Wei and president Liu Qing.

Both of them finally issued a statement on Tuesday to apologize to the families of the victims, and promising to take all necessary measures to rebuild public trust in the company.

What Didi should do now is work with authorities to bring its services under proper government scrutiny. Sharing economy is a new thing and Chinese officials are at a bit of a loss as to how they should deal with the new tech businesses. But now a consensus is emerging that the businesses should be brought under a proper supervisory mechanism.

Didi claims to be a smart mobile transportation platform, offering a full range of app-based transportation options for 550 million users. Daily rides have reached 30 million, allowing several million drivers to find flexible work and income opportunities.

Just like its global peer Uber, Didi is facing many challenges with regard to the ride-hailing operations. Given the recent murder incidents, as well as other reported cases of misconduct by its drivers, Didi cannot escape tighter government monitoring.

To give one example, Shenzhen has urged Didi to complete a rectification exercise by the end of September, providing detailed information on all its drivers and vehicles operating in the region.

If Didi refuses to do so, municipal authorities could pull the Didi app from online platforms. For China’s largest ride-hailing firm, the choice is clear: fall in line, or else suffer the consequences.

– Contact us at [email protected]

RC

EJ Insight writer

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