GROWING UP

China’s anti-corruption drive might be great for Uber and other ridesharing apps

Obsession
China's Transition
Obsession
China's Transition

Uber and like-minded ride-hailing companies serve a range of wealthy customers around the world, including white-collar professionals, high-rolling club kids, and business travelers. But Uber’s biggest competitor in China is tapping into an new, under-served niche—austerity-minded government officials.

Didi Kuaidi, the ride-hailing company that’s active in over 300 Chinese cities, announced a service specifically for China’s 10 million civil servants on June 29. Government bureaus will soon be able to register (link in Chinese) for department-wide accounts on the app, which officials can then use to hail rides and expense fares.

After Xi Jinping’s reforms, “government officials don’t have any cars, so they need to figure out another convenient way to travel for business purposes,” a Didi spokeswoman told Quartz.

Corporate accounts are nothing new for ride-hailing companies. Uber introduced company-wide accounts in January 2013, in a effort to spur adoption among office employees. Didi introduced them two years later (link in Chinese) for its customers in China. Uber and Didi have been successful with civilians in big cities like Beijing because there’s not enough licensed taxi cabs to meet demand.

But government officials make up their own target market in the wake of Xi Jinping’s anti-extravagance campaign—there’s now a dearth of transportation options that appropriately convey these bureaucrat’s status without being politically incorrect.

That’s because municipal and state officials once had easy access to their own fleet of private vehicles, often with drivers, purchased by departments themselves, and financed through public funds. About 80 percent of these vehicles were produced by foreign brands, with Volkswagon AG’s Audi making up one-third of all state and city-affiliated vehicles, Bloomberg has reported.

But in July of 2014, the state government demanded (link in Chinese) the suspension of these fleets, and called for hundreds of extraneous cars to get auctioned off to the public. The following auctions, held by all levels of government, raked in millions of dollars per session. Instead of cruising around in Audis, officials got a monthly stipend worth $80 for transportation.

Monthly salaries for officials range from just 1,320 RMB (US$212) to 11,385 RMB ($1,384). So government officials who are not corrupt can’t afford an Audi themselves (plus they’re too ostentatious now anyway). But showing up to a meeting in a dirty public cab undermines one’s status as a big shot government official.

Enter Didi. A company spokeswoman says that the service for bureaucrats comes as a direct response to the crackdown on private government fleets. While pricing and vehicle types haven’t been specified, the spokeswoman says that officials can be paired with certain cars depending on their rank.

No public numbers are available to show how many cars will be displaced as a result of the campaign. But Didi’s vice president Du Jincheng told the China Daily that the market for corporate and government ridehailing in China tops $16.83 billion. The company is working with officials in Jiangxi and Zhejiang province to figure out how to serve the needs of officials there.

Didi’s plan to serve status-starved bureaucrats only highlights the tension between ridehailing companies and the Chinese government. Private cars using ridehailing apps to drum up business were declared illegal in Beijing earlier this year, local authorities have raided Uber’s and Didi’s offices in several cities, and taxi drivers have staged violent protests.

But the companies fill such a large market void that it has been hard for the Chinese government to kick them out in earnest. If government officials become loyal Didi customers, it is going to be even harder.

Zheping Huang contributed to this piece.

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