The reasons why it’s gotten so tough—and expensive—to hail a ride in China

Feeling ignored.
Feeling ignored.
Image: Reuters/Petar Kujundzic
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Ride-hailing in China is getting harder. Uber quit the market last August by selling its operations to rival Didi Chuxing. Then Didi, finding itself in a near-monopoly position, began to raise fares, cut back on discounts, and lower the subsidies used to motivate drivers.

Now things are getting worse, especially as the mass travel associated with Lunar New Year—the largest annual human migration in the world—has already begun. The weeklong holiday, in which hundreds of millions travel to their hometowns or vacation destinations, officially starts on Jan. 28, though many start earlier.

Chinese commuters have complained in recent days that hailing a ride has become more difficult in big cities such as Beijing, Shanghai, and Guangzhou, as drivers head home. But while the holiday driver shortage is nothing new, the situation this month is worse than in previous years, according to Chinese news reports. A Didi user in Shanghai told the local broadcaster (link in Chinese) that her commuting expenses are now 10 times higher than usual, for instance.

Behind such frustration is a bigger problem for the ride-hailing industry in China: new anti-migrant rules starting to be implemented. Didi offers two types of service: One lets users hail traditional taxis, while the other connects them to the average Joe who operates his own car. The new rules regulate the latter type of driver.

Many such drivers are from rural areas of China. This generally means they lack a local hukou—a household registration—for the larger city in which they’ve come to work. (Licensed taxi drivers by contrast have long been required to have such paperwork.)

Last month several of China’s first-tier cities released local regulations for the ride-hailing sector (following earlier national rules that left room for interpretation by local authorities). The most controversial came from China’s two biggest cities, Beijing and Shanghai. They now require that ride-hailing drivers have not only local license plates, but also a local hukou. (While such rules could be deemed discriminatory in the US, they are largely in line with other Chinese regulations dealing with the huge influxes of migrant workers into major cities.)

Other big Chinese cities (including Guangzhou and Shenzhen) have set the bar lower, requiring of such drivers only a local residency permit, which is easier to get than a local hukou.

Didi recently began removing migrant drivers from its ride-hailing service, a move that has coincided with the driver shortage. For example starting this week, Didi drivers in Shanghai without a local license plate have received text messages warning they’ll be removed from the app within days, according to reports in the Financial Times (paywall) and the Chinese newspaper Beijing News (link in Chinese).

“We are gradually bringing operations in line with the general expectations of different local regulations,” a Didi spokeswoman wrote in an email to Quartz. “Things vary because in most cities there are transition periods.”

The main reason behind this year’s driver shortage, she claimed, citing a growing number of daily completed rides, is simply more demand for Didi’s service than in previous years. But “there are other reasons” in force as well, she added.

When Shanghai shared the initial draft of its new driver regulations last October, Didi protested strongly (paywall), saying that less than 2.4% of its drivers had a local hukou. The Didi spokeswoman told Quartz the real percentage was likely higher, and the figure at the time was “based on extreme hypothetical scenarios.” She said the company has “alternative business plans that are already in progress” to deal with the potential driver shortage stemming from the anti-migrant rules.

The company has shown some flexibility of late. It announced on Jan. 23 (link in Chinese) that it would temporarily disable one app feature that was likely exacerbating the difficulties of flagging a taxi on the street— which more people are trying to do because there are fewer ride-hailing drivers around. A Beijing resident complained to local media (link in Chinese) that she recently waited 70 minutes while booking cabs on Didi and trying to hail taxis on the street at the same time.

Introduced in November 2015, the feature automatically pops up a reminder during peak hours for users to tip taxi drivers ahead of time to increase their odds of getting picked up. Of course users can still do it, but without the reminder fewer will. That should decrease the number of cabbies holding out for such users and ignoring people trying to hail a cab from the street—people unlikely to tip since that isn’t a part of Chinese culture.

But the bigger problem is that many ride-hailing drivers are quitting. A full-time Didi driver in Beijing told Beijing News (link in Chinese) that at least a third of his colleagues from other parts of China have decided against returning to the city after the holiday because they dread tougher crackdowns on non-local drivers.