Letters | Why mainland China’s ride-hailing economy is a cautionary tale for Hong Kong

Readers discuss the problems posed by ride-hailing platforms, and ways for the West Kowloon Cultural District to generate revenue

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A ride-hailing app on a smartphone in Beijing. If platforms are allowed to charge arbitrary commission rates, drivers will become cheap labour for the platforms. Photo: Bloomberg

Published: 11:30am, 23 Jul 2024

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Over the past year, I have personally driven taxis, gaining real-life experience of taxi drivers’ operating environment and passengers’ needs. Having worked in both Hong Kong and Shanghai and frequently used ride-hailing services in mainland China, I understand the ecosystem there. While I agree that taxi services in Hong Kong need improvement, giving ride-hailing services a free pass is not advisable.

The biggest problem with Uber is its non-transparent pricing mechanism. Although passengers are shown estimated prices when booking, the Uber model adjusts prices based on demand to maximise profits. During low-demand periods in many markets, it undercuts taxis with cheaper prices. Given that taxi fares are metered, this leads to unfair competition.

Point-to-point transport via ride-hailing services is also a type of public service. If ride-hailing platforms are to be legalised, their pricing and commission rates must be regulated. Private companies cannot be allowed to act on their commercial interests alone and engage in a price war, as this severely impacts drivers’ incomes. The minimum charge should be maintained at the same level as for taxis. When demand increases, if Uber is allowed to raise fares, taxis should also be permitted to increase their rates accordingly.

Furthermore, if platforms are allowed to charge arbitrary commission rates, as they have been on the mainland, drivers will become cheap labour for the platforms. Ridiculously, some platforms are still operating at a loss – isn’t this a lose-lose situation?

On the mainland, local governments are warning that the supply of ride-hailing drivers has reached saturation. Mainland drivers have told me their rental costs are around 500 yuan a day, from 7am to 11pm. Despite working longer hours than Hong Kong drivers, they earn only 300-500 yuan a day. Some have stopped using air conditioning in their vehicles to save on expenses.

Ride-hailing services on the mainland have been seen as a way to keep people employed. In contrast, Hong Kong’s unemployment rate has long been low. Issuing too many licenses would lead to oversupply, and incomes of both taxi and ride-hailing drivers could drop significantly, affecting service quality.