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    Home / China / GBA focus

    Tech giants bite the bullet to stay afloat

    By Chai Hua | HK EDITION | Updated: 2021-09-10 15:00
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    大发快3-首页 www.gospeljazzbyhlsteins.com China's car-hailing providers rekindle fight for business amid tighter scrutiny by regulators, with a new market order likely to emerge. Chai Hua reports from Shenzhen.

    Some of the Chinese mainland's most prominent technology behemoths may have incurred the wrath of the nation's regulators for cybersecurity violations and rising competition, but are fighting to turn the tide.

    Market and cyberspace watchdogs launched probes into Didi Chuxing - China's largest ride-hailing provider - because the company illegally collected and used personal information. The investigations came after the tech giant went public on the New York Stock Exchange in June, raising about $4.4 billion. The Beijing-based group, which boasts more than 500 million users and millions of drivers, was subsequently removed from app stores on the mainland, and US securities authorities temporarily halted all IPOs of Chinese enterprises in July.

    Didi has since tweaked its modus operandi. A driver surnamed Huang, registered on the group's app in Shenzhen, is surprised to find that despite the company's woes, his income hasn't shrunk so far and has even gone up. He said he can now rake in up to 700 yuan ($108) a day by switching between ride-hailing platforms.

    Didi and many other such platforms are offering commission-free and subsidy incentives for both drivers and passengers in order to stay afloat in the business and grab a bigger market share. The new business environment has rekindled the battle for online car-hailing services, reminiscent of the industry's infancy a few years ago. Didi survived that fight, but can it ride it out this time?

    Incentives geared up

    The car-hailing business isn't alone in having to confront the challenges ahead. The data-reliant sector also has to deal with stricter personal-data protection regulations that can lead to a market reshuffle.

    While maneuvering the gray areas is no longer seen as an option in luring customers, small and midsize players, as well as newcomers, are also eyeing more business.

    However, Danny Mu Fei, a principal analyst at market research company Forrester, believes that while Didi's predominant position, with a solidly entrenched client base, will still be hard to challenge in the near term, the car-hailing industry may see a reshuffle among players vying for the second to sixth spots.

    Didi, surprisingly, saw its business surge more than 13 percent in July, compared with the previous month, exceeding the sector's average growth rate of 10.7 percent, according to the Network Vehicle Monitoring Information Interaction Platform.

    Mu said he found that operators are still relying on cost incentives to woo new customers amid fierce competition.

    AMAP - China's leading mapping and navigation services provider - recently initiated a "commission-free" campaign for new customers along with dozens of car-hailing service providers on its platform. The move is aimed at raising drivers' income and getting more of them into its fold. Customers can also compare prices of these vendors on the platform before making their choices. To engage more users, nearly all the mainland's car-hailing firms have distributed various types of coupons.

    "I once paid just 29 yuan for a 13 kilometer trip that should have cost 46 yuan. Thanks to the coupons," said Sun Lin, a passenger in Shenzhen.

    Hong Kong-listed mainland on-demand retail platform Meituan, which focuses on takeout food delivery services, has also joined the fray with a car-calling app, offering multiple discount coupons to new customers. Didi is distributing various coupons to customers as well. In Shenzhen, three 5 yuan coupons are being sold for 1 yuan.

    The duel has caught the eye of the authorities. The Ministry of Transport and four other ministries warned against "irregular" business practices and "vicious competition" at recent meetings with representatives of 11 internet-based car-hailing platforms, including AMAP, Didi and Meituan.

    "In the long term, these companies should focus on different customers, driver services and experiences," Mu said. Such a strategy is needed to eliminate gray areas as the nation tightens data regulations.

    The mainland's Data Security Law came into effect on Sept 1, and the Personal Information Protection Law will be enforced on Nov 1. App operators are warned that their services will be suspended or terminated if they're found to be illegally handling personal information. Offenders face a maximum fine of 50 million yuan or 5 percent of their company's turnover.

    Utilizing data and algorithms to influence choices of users, hijacking traffic or disrupting the operations of website products and services provided by other operators are viewed as intruding into the gray areas. Other illegal practices include displaying unfair and varied information to different users for the same products or services, based on user behavior and information analysis, which can disrupt the order of fair transactions in the market.

    Zhang Xi, an analyst at the Guangdong Transportation Research Center, said that a new market order will emerge as players vie for business.

    New standards expected

    He said all companies, not just industry heavyweights that plan to list abroad, have to ensure data security. He expects a series of industry regulations and standards on data usage to be issued soon, and those who can help to set up new rules will have an advantage in winning business.

    "There're also other possibilities, involving more market players. If you have unique technical advantages and can provide new ideas, you'll have a better say," Zhang said.

    Some industry players have started applying innovative methods. Mainland bike-sharing titan Hello Inc last month launched a personal carbon emission system nationwide. Based on the system, its users can exchange their carbon emission reduction points for car-hailing services.

    As for companies with a bigger international outlook, overseas competition has also entered a new stage due to the growing awareness of data protection globally, said Sean Li, regional vice-president and managing director of Greater China, Akamai Technologies, a web and internet security services provider.

    He said many Chinese internet firms that intend to attract more active users now realize that laws and regulations on data privacy protection in various places are vital to their operations. For instance, the General Data Protection Regulation in member states of the European Union is among the toughest legislation governing the collection and usage of personal data worldwide.

    According to Li, many firms are consulting Akamai on data protection methods and strategies, indicating that Chinese firms are paying greater attention to the matter.

    He believes that with the enforcement of rigorous data breach laws and other privacy rules in key international markets, managing regulatory compliance risks and mitigating the threat of data violations are key to the success of Chinese companies going global.

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