The car-hailing app competition just got a bit stiffer in Guangzhou. Transportation authorities in the southern Chinese metropolis formerly known as Canton announced they will roll out a government-run, Uber-like car service app just two weeks after raiding Uber’s offices there.
According to local newspaper Nanfang Daily, Guangzhou’s transportation bureau is preparing to launch an app called Ruyue to compete with other apps that currently operate in the city, like U.S. import Uber and the Chinese-owned Didi Kuaidi. In their recent raid on Uber’s offices in Guangzhou, authorities seized mobile phones and other office equipment. According to various reports, the raid was the result of stepped-up enforcement of local laws that ban car-hire services that use private drivers without taxi licenses. At the time, Uber released a statement stating it would “maintain open channels of communication" and would "work closely with local authorities in cooperation.” Though Uber is continuing to operate in Guangzhou, Ruyue’s rollout will offer a similar service with government approval.
The new state-run company already has lined up nearly 3,000 mid- to high-end vehicles ahead of the app's launch, the Nanfang Daily reports. The transportation bureau says Ruyue's service will be safer for passengers because drivers will be licensed and will all have experience as former cab drivers.
As a public company, however, Ruyue is in for an uphill fight with privately owned competitors. According to Tech In Asia, Ruyue’s early finances show less competitive pricing compared to Uber and Didi Kuaidi, which is likely to deter drivers and riders. The report says the current beta-phase trips have fares about three times those of regular taxis and five times Uber's prices. With private financing, Uber and Didi Kuaidi can subsidize their drivers, and rely on them to provide their own vehicles.
“We don’t have the huge financing to compete with Uber on pricing and subsidies,” an unnamed Ruyue operator told the Nanfang Daily. “Even if we buy mid-tier cars for 200,000 yuan each, we’ll spend more than 100 million yuan if we buy vehicles,” another added. With Ruyue, the responsibility is on drivers to bring in at least 10,000 yuan (about $1,600), in order to receive a monthly salary of 4,900 yuan, about $784.