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On the night of July 5, I experienced an extremely dull taxi journey in Hangzhou.

After getting off the plane at Xiaoshan Airport, I followed the clear directional signs to the clearly located online taxi waiting area. I used my mobile phone to call a car almost instantly. Then I told the driver "I'm waiting for you at Channel 1" with just a few words, and more than 4 minutes later, I was in the car that drove up to me.

In fact, this kind of dullness is not "dull" at all, and it is even a bit uncomfortable.

For those who often take taxis at airports and train stations, they always have to fight wits and courage with all kinds of frustrating uncertainties, from asking strangers where to call a taxi, to communicating with the driver about the boarding location, to being wary of the driver taking a detour.

"Rome wasn't built in a day, and neither was Hangzhou." Zhuang Zhiqiang, CEO of Xihua Travel, recalled that his taxi experience in Hangzhou around 2010 was also extremely bad. The whole city was congested, and taxis would refuse to pick up passengers...

"Detour", "random charges", "meters are useless" are the keywords that come to mind of Yang Xiaohua, CEO of Tengfei Travel, when talking about traditional cruising taxis from more than a decade ago.

Over the past decade, with the joint efforts of the local government and a group of entrepreneurs, Hangzhou's transportation industry has changed through continuous innovation.

Nowadays, when it comes to taking taxis, Hangzhou has become a city that is relatively friendly to "i-people (meaning introverted people who don't like to talk much)", as there are few problems and no hassle.

gravitational

Zhuang Zhiqiang is the founder of online car-hailing company Xiehua Travel. He still remembers a small experience he had in Hangzhou six years ago.

On September 13, 2018, Zhuang Zhiqiang saw a parking space dedicated to online ride-hailing vehicles at Hangzhou East Railway Station. Parking spaces are a scarce resource in any big city, and providing parking spaces specifically for online ride-hailing vehicles is not common even today, let alone the shock it brought to him at the time.

This experience came at the right time. It made Zhuang Zhiqiang feel Hangzhou's advanced thinking in traffic management and prompted him to start thinking about the possibility of starting a business in Hangzhou.

Although Hangzhou is a city with extremely fierce competition in the field of online car-hailing, data from the Hangzhou Municipal Transportation Bureau shows that as early as March 2019, there were 10 online car-hailing platforms in operation in Hangzhou, more than most provincial capitals.

But Zhuang Zhiqiang still decided to start a business in Hangzhou in 2019. Because he is more concerned about "rules" than market competition. In his own words, "the 'certainty' brought by rules is more precious than anything else for entrepreneurs."

At first, Zhuang Zhiqiang went to the Hangzhou industry regulatory department with trepidation to inquire, "We are a startup company and want to develop in Hangzhou", and then got a very clear reply, "The conditions are all good and you are welcome to come. Not only you, but everyone who asked me gave me this answer."

After some research, Zhuang Zhiqiang's view on the market in Hangzhou is that whether it is the access at the enterprise level or the access of vehicles and drivers, it is all smooth, and the regulatory authorities will not treat the platform differently depending on the size of the platform. The water is kept level.

When it comes to driver qualification, Hangzhou does not restrict household registration. Even if you are not a Hangzhou resident, you can take the test as long as you have a residence permit or have lived in Hangzhou for more than 6 months.

The simple, open and transparent regulatory style of Hangzhou’s competent authorities for the online ride-hailing industry has brought higher entrepreneurial efficiency to entrepreneurs like Zhuang Zhiqiang.

Yang Xiaohua's situation is different from Zhuang Zhiqiang's when it comes to starting a ride-hailing business. The first city to open for Tengfei Mobility was Yiwu, and the second was Hangzhou. Yang Xiaohua's evaluation of Hangzhou is that "the distance, local customs and people are very similar to Yiwu, the track is large enough, the scale is large enough, and my experience is good."

Many years ago, Yang Xiaohua took an unmanned bus in Hangzhou with a fare of 1 yuan, but the smallest note he had in his pocket was a 5-yuan bill. When he was in a dilemma, the driver told him that he could collect 4 yuan from the subsequent passengers and then put in the 5 yuan.

"The driver explained that we receive such training when we go to work or take up our posts. When passengers encounter such problems, we have an obligation to help them solve them. I feel that the temperature of Hangzhou's city traffic is different." Yang Xiaohua recalled his experience of Hangzhou's traffic.

Yang Xiaohua was also impressed by the efficiency of doing business in Hangzhou. Once, he went to Hangzhou Citizens' Home to handle business. After handing in the documents at the window, he was ready to leave. Then, he was stopped by the window staff, "Why are you leaving?" He replied, "I'll go back and wait for notification." The staff said, "Don't leave yet." In the end, it only took him 20 minutes to complete the business on the same day.

Another industry participant, Yu Dingguang, head of Fengyun Travel in Hangzhou, has similar feelings. Fengyun Travel is headquartered in Wuhan and entered the Hangzhou market in 2022.

Although it is a non-local company, Fengyun Travel has not encountered differentiated treatment in the Hangzhou market. On the contrary, because of its systematic service capabilities, it surpassed most local companies and ranked second in the first quarter service quality evaluation.

In Yu Dingguang's view, even though the competition is much more intense than it was a few years ago, the open, equal and transparent Hangzhou online car-hailing market is still open to ambitious and capable startups.

Every quarter, Hangzhou City will publish online ride-hailing market operation monitoring information. In addition to publishing basic market operation conditions such as capacity and volume, it will also provide detailed daily average online time and revenue analysis of online ride-hailing vehicles to help market entrants, operators, practitioners, and investors understand the market and prevent more damage caused by information asymmetry.

choose

At present, small and medium-sized enterprises such as Xihua Travel, Tengfei Travel, and Fengyun Travel have formed a balance of power with leading enterprises in Hangzhou's online car-hailing market. This is not only due to their own efforts, but also a choice of finding a new way to compete with the giants in a differentiated way.

In 2016, Yang Xiaohua, who was originally in the taxi business, saw the huge potential in the Internet travel market and decided to try to build an online car-hailing platform in Jinhua, Zhejiang. Tengfei Travel started from this.

Initially, Tengfei Travel invested nearly 50 million yuan to build its own platform. From the perspective of timing and location, Yang Xiaohua's choice was not accidental.

From the perspective of "timing", the aggregation model had not yet appeared at that time, and Yang Xiaohua did not have many other options except building his own platform.

From the perspective of geographical advantages, Yang Xiaohua also opened a driving school near Tengfei Travel, where nearly 100,000 people go to take driving tests every year. Yang Xiaohua believes that these people all have the need to take a taxi, and the driving school staff can also promote it. Although building a platform by yourself is a very expensive thing, the probability of success seems to be very high because there is no worry about passenger flow.

But things went against his wishes. In the end, except for the funds used to buy the car, Yang Xiaohua lost nearly 37 million yuan because too many situations occurred that he had not expected.

For example, the positioning of the self-developed App was always inaccurate. In order to solve this problem, Yang Xiaohua spent a lot of money but to no avail. In addition, many users deliberately did not pay after taking the taxi and blocked the customer service, which also caused Tengfei Travel to suffer heavy losses. Not only users, but even drivers were "uncooperative" - ​​after issuing small coupons with poor results, Tengfei Travel began to issue some large-denomination coupons, but Yang Xiaohua found that this move did not attract real users, and some were just drivers frequently swiping orders. "Some drivers took their families around."

After stepping into the "pit", Yang Xiaohua found that there was still about 5 million yuan left in the company's account. If the technical department was cut, it could survive for about a year, and if the technical department was retained, it could only survive for 4 months. At the end of 2019, Yang Xiaohua found a new way out for Tengfei Travel - giving up building its own platform and attracting its own traffic, and instead cooperating with the aggregation platform AutoNavi to take the industrial route of division of labor and cooperation.

This has brought visible results to Tengfei Travel.

First, the cost was reduced, and the original positioning and other map-related problems were completely solved. Second, the efficiency was improved, and the order volume increased from a maximum of 700 orders a day to more than 10,000 orders a day.

In terms of business model, Xiehua Travel did not pay such a "tuition fee" like Tengfei Travel. Zhuang Zhiqiang chose to cooperate with the aggregation platform from the beginning.

Zhuang Zhiqiang believes that "certainty" is what a startup online ride-hailing company cares about most. If it builds its own platform and attracts traffic, "I'm not sure how long customers will stay after they come, and I'm not sure about the supply of drivers, and to what extent it needs to be prepared to meet market demand."

The cooperation with AutoNavi has helped Zhuang Zhiqiang, who has a strong sense of risk, dispel his concerns about "certainty".

Zhuang Zhiqiang said that the stable traffic allowed me to calculate the accounts clearly, and only with a definite financial model would the company dare to invest.

"The aggregation model is not new. There have been video aggregation, payment aggregation, and catering aggregation. What we see today is just the aggregation of taxi-hailing. In fact, ticket sales for railways and Minghang are also aggregated. This model gives passengers more choices, allows small and medium-sized platforms (that is, new business models) to develop, and expands the choices and income of the driver group, which has a positive effect." said Zhang Zhuting, chairman of the Legal Affairs Committee of the China Communications and Transportation Association.

Zhuang Zhiqiang believes that if there is no aggregation model, more than 90% of enterprises will be very cautious about industry investment, and the industry will find it difficult to develop. On the aggregation platform, through centralized user needs and regional fulfillment services, the overall service responsiveness and supply and demand matching efficiency will be better.

He Jianhua, researcher and former vice president of the Shanghai Academy of Social Sciences, believes that through policy guidance and technological openness, the traditional taxi industry and Internet aggregation platforms should work more closely together to complement each other's strengths, thereby creating a new pattern that can not only efficiently meet the public's travel needs, but also effectively protect the rights and interests of practitioners and effectively improve the overall quality of urban travel services.

In Hangzhou, as of March 31 this year, there were 78 online ride-hailing platform companies that had obtained the "Hangzhou Online Taxi Booking Business License".

For aggregation platforms, if their own technical support capabilities and product interaction experience cannot continue to improve, they will not be able to gain bilateral recognition from users and online ride-hailing companies.

At the end of 2020, AutoNavi discovered that there was a vigilant phenomenon in the usage behavior of platform users - in cities with more cooperating online ride-hailing platforms, users spent a long time on the taxi-hailing page and needed to repeatedly select and operate before they could successfully call a taxi. "As users have more choices, the decision-making cost will also increase, which shows that there is still a lot of room for optimization in the interaction of our products."

Therefore, the AutoNavi taxi product team began to look for a better way to interact and improve the user experience. After comparing multiple solutions and conducting experimental tests, they finally found that the "price bar" design was the best and could help users reduce their operation time by nearly 45%.

The continuous investment and openness of products and technologies have allowed online ride-hailing companies to see the possibility of long-term development.

Collaboration

When it comes to managing drivers, the Hangzhou authorities did not pass the pressure on to online ride-hailing companies, but instead drew a clear bottom line for the industry.

For online ride-hailing companies, drivers are a very important transportation resource. Therefore, some online ride-hailing companies may turn a blind eye to drivers' violations and are unwilling to simply and crudely block their accounts. "We are also concerned that after drivers leave our platform, will they become a transportation resource for competitors?" Yang Xiaohua said.

In order to plug this "BUG", the industry's competent authorities have formed a "blacklist" mechanism. Drivers who have problems such as refusal to pick up passengers and safety hazards will be included in the "blacklist" and the information will be regularly synced to various online ride-hailing companies, which are prohibited from introducing "blacklist" capacity.

"This system is very good. Drivers also know the consequences they will face (if they violate the rules), which makes them feel awe and have a sense of bottom line, which is very important," said Zhuang Zhiqiang.

For example, online ride-hailing vehicles are operating vehicles, so insurance premiums are higher than non-operating vehicles. Some drivers will secretly change the nature of their vehicles from operating to non-operating in order to save money, and the online ride-hailing companies to which the drivers belong often find it difficult to grasp this change in the first place. However, the regulatory authorities in Hangzhou will pay attention to the vehicle information of online ride-hailing vehicles and proactively share the changes with online ride-hailing companies such as Xihua Travel in a timely manner.

In the past few years, Hangzhou has gradually cleared out non-compliant online ride-hailing vehicles. Yang Xiaohua said that if a vehicle can only get a license the day after tomorrow, then it is non-compliant between today and the day after tomorrow. Tengfei Travel will arrange for the drivers of these vehicles to work at the service station for two days first, and give them 100 to 150 yuan a day as basic living allowance.

How can Tengfei Travel know the compliance progress of each driver? The answer is to rely on the regulatory authorities. During that period, the Hangzhou authorities pulled all online car-hailing companies into an online communication group. The companies could get minute-by-minute responses on the progress of drivers' licenses in the group, and the information sharing was detailed to the level of each vehicle.

In addition to supervision and services, the market mechanism is also playing an effective role. "The competent authorities have set up the entire framework for you, and as for how to survive, it is up to each company to work hard on its own," said Yu Dingguang. "Consumers and drivers will cast their own votes in the market."

As early as three years ago, Hangzhou had embarked on the path of collaborative governance between the government and enterprises in the online ride-hailing industry, with the competent authorities, aggregation platforms, online ride-hailing companies and other parties jointly promoting the standardization and healthy development of the industry.

On March 11, 2021, Hangzhou’s transportation management and service department convened seven aggregation platforms, including AutoNavi, Ctrip, and Fliggy, to hold in-depth discussions on further creating a legal, standardized, orderly, and stable operating environment for the city’s personalized travel market and building a sound government-enterprise collaborative mechanism.

"The industry regulatory authorities have provided many opportunities for communication. They often bring companies like us together to discuss industry issues, such as how to manage stations, how to manage scenic spots, how to optimize the user's riding experience, what reminders we should set, and how to guide users. They give us many opportunities to express our opinions," said Yu Dingguang.

The aggregation platform also assumes the responsibility of driving the healthy development of the industry.

Zhuang Zhiqiang said, "If the passenger service is not good, your rights and interests in the platform may be relatively reduced, and even affect revenue. It is equivalent to that if your business at this 'stall' is not doing well, you have to consider moving to another place."

The differences in the development of online ride-hailing companies on the Gaode platform reflect, to a certain extent, the impact of the assessment mechanism on them.

In recent years, with the improvement of passenger experience as the core and guided by regulatory rules and industry standards, AutoNavi Taxi has gradually established a three-dimensional and complete evaluation mechanism to measure the monthly comprehensive service level provided by partners from different dimensions such as safety, efficiency, and experience.

Online ride-hailing companies that rank high in the monthly rankings will be labeled as "five-star platforms," ​​making it easier for them to gain the favor of users. In addition, they may also receive financial rewards from AutoNavi.

This not only ensures good service and good income, but more importantly, it can drive online ride-hailing companies to continuously correct service and experience issues.

For online car-hailing companies, they can focus more on providing travel services under the condition that each company performs its duties, cooperates with each other and has clear rules. In Yang Xiaohua's view, since the model is fixed and there is no need to spend a lot of money on acquiring customer traffic, Tengfei Travel can further focus on improving its service capabilities.

value

Yang Xiaohua considers himself a "small business owner" and does not shy away from admitting the gap between Tengfei Travel and the giants. In his opinion, only by not making a fuss can small and medium-sized enterprises survive and develop better.

"At present, with a scale of 10,000 orders per day, Tengfei Travel's own financial performance is good, and it has no plans to continue expanding," said Yang Xiaohua.

Similarly, in Zhuang Zhiqiang's view, he hopes to make the online car-hailing business a long-term business and a long-term career, making the company small and beautiful and operating it more refined.

It is not only sustainable at the operational level, but also a leap-forward improvement in user service levels. It is also another kind of social value released by many small and medium-sized passenger transport companies after they got involved in online ride-hailing.

"Traveling requires very accurate real-time traffic conditions and route planning, which cost a lot of money. When we cooperate with AutoNavi, we don't need to consider these issues. Instead, we focus on providing good services, doing what we are good at, and creating differentiated competitive advantages," said Zhuang Zhiqiang.

In addition to objective conditions, enhanced guidance from aggregation platforms is becoming an important force in promoting the healthy and orderly development of the industry.

Taking the driver service center as an example, Gaode Taxi has long provided cash rewards to partners with complete offline training and service capabilities.

This positive incentive has played a role in the aggregation ecosystem. In recent years, driver service centers of online car-hailing platforms have sprung up like mushrooms after rain, and there are more than 200 driver service centers of scale in major cities across the country.

In Hangzhou, online car-hailing drivers also have full choice. They can bind to multiple platforms at the same time and choose any platform to run orders. "To a certain extent, this is also forcing companies to pay more attention to the service of the driver group." Yu Dingguang said.

The transportation capacity represented by drivers is currently the most important resource for online ride-hailing companies. In addition to income security, the "human touch" in management and service has also become a highlight of the competition among online ride-hailing companies.

The principle that many hands make light work is vividly demonstrated in Hangzhou's online car-hailing market.

Under the joint governance of the industry authorities, online ride-hailing companies, aggregation platforms and other parties, all parties have enjoyed the greatest development dividends - Hangzhou has become one of the most regulated online ride-hailing markets in the country, and the majority of users have enjoyed a convenient and comfortable consumption experience, drivers have enjoyed a stable income and a free working environment, and small and medium-sized online ride-hailing companies have enjoyed a low-cost, high-efficiency business model...

By Wang Ziyang

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