In China, As In The U.S., The Fight Over Ride Hailing Is Local : All Tech Considered Until recently, migrant workers lured by bonuses drove for China's largest Uber-like service. But some local governments banned out-of-town drivers, apparently to protect local jobs and curb growth.
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In China, As In The U.S., The Fight Over Ride Hailing Is Local

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In China, As In The U.S., The Fight Over Ride Hailing Is Local

In China, As In The U.S., The Fight Over Ride Hailing Is Local

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KELLY MCEVERS, HOST:

We look at the competition between ride hailing companies Uber and Didi for global domination in this week's All Tech Considered.

(SOUNDBITE OF MUSIC)

MCEVERS: And with us first is NPR tech reporter Aarti Shahani, who has done a lot of reporting on Uber. Welcome.

AARTI SHAHANI, BYLINE: Hi.

MCEVERS: Uber has been having some problems recently. The most recent one is one of its self-driving vehicles crashed on Friday in Arizona.

SHAHANI: Uber has a fleet of self-driving cars. And in Arizona, a Volvo SUV got into a pretty bad accident and actually flipped on its side - I mean, literally just flipped over, which is - you know, it's not a great image for Uber to have out there. But, you know, this is a really important detail. According to the police report by Tempe police, it was not the fault of this scary, new self-driving technology. It was the human behind the other car's steering wheel who failed to yield.

While some people are worried that self-driving cars are going to take human life, others counter that humans themselves are terrible drivers. You know, we text. We drink. We speed. And they say fewer people will be here on the road if we let the cars self-drive. And this accident appears to be a data point in favor of that latter argument.

MCEVERS: How does this hurt the company beyond the self-driving initiative?

SHAHANI: It's a bump on the road.

MCEVERS: Let's talk about Uber's main global rival now, the Chinese ride hailing company Didi. We actually asked our Beijing correspondent Anthony Kuhn to take a look at how Didi is doing in China. It's actually pretty important to China's government that Didi succeeds.

The country's economy's moving away from heavy industries like coal and steel, and all those workers need new jobs that don't require a lot of training. Driving for a ride hailing company could work, but as Anthony Kuhn found in Beijing, Chinese cities seem to be putting up a fight.

UNIDENTIFIED CHILD: (Foreign language spoken).

ANTHONY KUHN, BYLINE: On the city's fringes surrounded by affluent housing compounds and the headquarters of some of China's leading high-tech firms, there's a slum folks call Didi Village.

(SOUNDBITE OF CAR HORN)

KUHN: Many of its inhabitants are migrant workers who until recently worked for Didi Chuxing, China's largest ride hailing service. One of them is 35-year-old Wang Fei. He started driving last July. Back then, he recalls, Didi and its main competitor, Uber, were locked in a price war. They were offering bonuses to drivers and steep discounts to riders in order to grab market share.

WANG FEI: (Through interpreter) We got into this business because of the bonuses. Without them, there's no point. And then they started banning out-of-town cars and drivers.

KUHN: These bans were announced by some local governments in January, apparently intended to protect local jobs and keep migrants from swelling urban population. In August, Didi bought out Uber's China arm, and rides started getting scarce. Some commuters had to go back to taking taxis. Wang Fei said he was forced to quit driving for Didi and go back to his old job moving homes.

WANG F.: (Through interpreter) Hundreds of people in this village thought they had a chance to make money and bought cars. Now we can't make any money, and we still have to pay for our cars' maintenance.

KUHN: Wang Jun, an expert on corporate law at China University of Politics and Law in Beijing, describes the local rules as a step backwards.

WANG JUN: (Through interpreter) As soon as they started trying to regulate it like the taxi industry, it undermined the legalization of the ride hailing business.

KUHN: And that actually hurt the government's strategy to rescue China's rustbelt. Didi says that it provided part-time jobs to 2.4 million workers laid off from state-run coal and steel plants last year or about 60 percent of the total. It's not clear where these workers will now go. Wang Jun says he advised the government not to make its ride hailing regulations too restrictive.

WANG J.: (Through interpreter) Our main concern is that the regulations will kill off this fledgling industry.

KUHN: He draws several conclusions from the fate of the ride hailing business in China.

WANG J.: (Through interpreter) We mustn't make rules too hastily. We've got to give innovations time and space to develop. Also, we shouldn't stifle the development of innovative industries by forcing them into the regulatory frameworks of existing industries.

KUHN: Back in Didi Village, women stir-fry cured pork for dinner. It's a specialty of China's southwest region of Chongqing where Wang Fei and many of the drivers come from. Wang criticizes the local government regulations as backward-looking.

WANG F.: (Through interpreter) The central government's policies aren't bad. They change when they get to the local level. Local governments just don't obey Beijing.

KUHN: But just in case, Wang's still got his car. And if the rules change again, he says, he can go back to driving for Didi. Anthony Kuhn, NPR News, Beijing.

MCEVERS: And NPR tech reporter Aarti Shahani is still with us. And Aarti, it sounds like Didi is having some of the same challenges there in China that Uber is having here in the U.S.

SHAHANI: Definitely, you know, and I think that's a really key point. In some cities around the world, these two huge companies compete with each other. They'll have price wars, which can be great for riders - right? - because it drops the price. But at the same time, even though there is competition, they are both fighting supremely, intensively local fights to exist.

It was interesting for me to hear Anthony's report because of the difference in what's motivating local lawmakers there. It sounds like in China, it's a migration issue. These ride hailing jobs are bringing too many migrants into the city, so we want to nix them. In the U.S., it's often - not solely - but it's often a concern for the legacy taxicab industry.

MCEVERS: When you look at Uber and Didi around the world and how they do business, how similar are they?

SHAHANI: Oh, I think that they're very similar. I mean, just look at the technology itself that they rely on for their business. Didi put facial recognition recently on their app to verify a driver's identity - make sure it's not someone else driving a car. Uber is talking about doing the same thing. Both companies are working on their self-driving car fleets. I mean, they're really racing away with hardware and software that enables them to scale up and automate what they're doing. So they have a lot in common.

MCEVERS: In the competition between the two, who is winning?

SHAHANI: You know, it's too soon to tell. Didi is putting a lot of money into various competitors in the ride hailing industry around the world. So it's not clear if, in terms of the customer side, the Didi alliance will outweigh the Uber one over time.

In terms of the self-driving technology, I wouldn't be surprised if Didi was the one to win ultimately not because it has superior engineers, per se. But, you know, what I've heard from technology experts in Silicon Valley who work in China is that China just has fewer regulatory hurdles. And it seems like the Chinese government may be more willing to allow Didi to experiment on the roads than U.S. agencies are willing to allow Uber to experiment.

MCEVERS: You were recently in China, and you met with officials at Didi. What did you learn on the trip?

SHAHANI: Well, that meeting was off the record, but one really interesting development there is that Didi signed an agreement with the government of Shenzhen in China to share its data around ridership trends and infrastructure in the city to basically help the city figure out how to improve transportation. So it's a kind of move that is novel in the ride hailing industry, and I wouldn't be surprised if we saw Uber trying to do the same here.

MCEVERS: NPR's Aarti Shahani, thank you.

SHAHANI: Thank you.

(SOUNDBITE OF ODDISEE AND MAIMOUNA YOUSSEF SONG, "CONTRADICTION'S MAZE")

MCEVERS: And we're going to continue talking about the ride hailing industry on next Monday's All Tech Considered. My co-host Robert Siegel reports on how Uber's self-driving car experiment is doing in Pittsburg.

(SOUNDBITE OF ODDISEE AND MAIMOUNA YOUSSEF SONG, "CONTRADICTION'S MAZE")

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