Yidao’s CEO Zhou Hang Optimistic About The Future Of The Chinese Ride-Sharing Industry
摘要： On May, 22nd, Zhou Hang, CEO of Yidao Yongche delivered a key note speech at the inauguration ceremony of the Sharing Economy Branch of Internet Ecological Research Institute, which is supported by LeTV Holdings. In the speech, Mr. Zhou shared his understandings about sharing economy from four aspects.
On May, 22nd, Zhou Hang, CEO of Yidao Yongche delivered a key note speech at the inauguration ceremony of the Sharing Economy Branch of Internet Ecological Research Institute, which is supported by LeTV Holdings.
In the speech, Mr. Zhou shared his understandings about sharing economy from four aspects: 1 sharing economy is a type of "informal economy"; 2 modern people are willing to turn from industrial and standardized services to informal sharing services; 3 services provided in sharing economy has to be cheap enough; 4 new values need to be generated for sharing economy to outperform traditional economy.
Speaking of the public concerns over criminal cases related to online ride-sharing platforms, Mr. Zhou was confident that the establishment of an effective trusted system in the ride-sharing industry would help avoid such problems. He suggested that as long as people were really serious about the trust system, then they could certainly solve the problem with the help of big data technology, the management system of user accounts and an interactive comment mechanism.
Mr. Zhou also revealed the current performance of Yidao Yongche. He concluded that ride-sharing had already become an indispensable part of metropolitan life. In consideration the high demand for the service, platforms offering ride-sharing platforms could even determine the future of the Chinese automobile ecosystem.
In addition, he revealed that Yidao Yongche spent RMB 2 million last year. Although the market seems to be still burgeoning in China, it is high time people started to explore new ways of thinking and action.
The following is the full transcript of Mr. Zhou’s speech:
As you all know, ride-sharing is one form of sharing economy. After working in the industry for five and almost six years, I’ve gradually formed my own understanding of sharing economy.
My understanding of sharing economy
For me, sharing economy is above all “informal economy”, because oftentimes an informal employment system is adopted for companies in the industry to make full use of existing resources. Different from traditional economy, such employment structure can be a huge challenge for regulators. Companies in the industry are usually informal organizations, while employees in these companies are also informally employed, so there is no such thing as “five social insurance and one housing fund” here. How come? Generally, for ride-sharing platforms of over a million or even several million drivers, it is impossible to formally employ all of them.
In addition, why do people prefer cars hailed through ride-sharing platforms instead of taxis? On the one hand, it’s a lot more convenient to hail cars through these ride-sharing platforms; on the other hand, modern people are willing to turn from industrial and standardized services to informal sharing services.
However, we have to admit that there’s one prerequisite: services provided in sharing economy has to be cheap enough. If not, I don’t think if sharing economy can outperform traditional economy and grab the market. This is also a lesson we learned in practice. We used to be uncertain about how to “educate” users and find the entry point to the market. Sometimes, even if we did a lot, things didn’t necessarily turn out well. Later, we realized from both Uber’s and our own experience that low price is the most potent weapon to win users.
Low price will help to enter the market, but can it alone help you keep you users? Of course not. Subsidy strategy is after all not sustainable, and new values need to be generated in order to keep users. For example, new values generated by Airbnb are so personal, surprising and full of expectations. These values are in stark contrast to those of traditional industries, which are generally standardized, reliable and predictable. However, it is entirely possible that new values generated by Airbnb can completely change the original value system, and new possibilities will be created by transforming traditional industries.
How to establish an effective trusted system
It is foreseeable that over ten million or even a hundred million drivers will be included in the system in the near future. In this case, it could be very challenging to establish an effective trusted system.
In terms of criminal behaviors related to ride-sharing platforms, some people complain that such extreme events are the exception, not the rule, others believe that we have to face up to this new challenge, because we have the capability and the responsibility to solve this problem and provide better service than traditional industry with the help of new platforms and new technologies. In the past, taxi drivers and passengers are complete strangers; today, with the help of big data technology and an effective user account system, we are totally capable of providing users with service that is safer and more reliable.
In addition, an effective review system, such as Yidao’s “Yi Shield”, will be very efficient in dealing with orders of riders who are judged by the system to be cheating. However, our goal is to be able to develop a risk control system, tell “true” orders from “fake” ones and provide these users with services when they really need a ride.
The current situation of Yidao
Up till now, Yidao Yongche has already covered over 200 cities in China and around 30 cities overseas. The number of registered users has already reached 40 million, and the number of daily orders has surpassed roughly over 700,000. If everything goes well, I expect to see the number of daily orders reached 1 million by the end of June, 2 million by the end of 2016, and 5 million by the end of 2017, conservatively speaking.
Once, our goal is to provide 10 million cars in service on our platform and serve over 100 million users. However, when we see it now, we shall soon achieve such goal. If everything goes all right, we shall achieve this goal in 2016, or at most in 2017. What does it mean to provide 10 million cars in service? 10% of car owners in China will be included in the sharing economy then and become part of the sharing network. At that time, sharing economy will become an overwhelming phenomenon in our society.
Ride-sharing might even influence the entire automobile industry
Whether we admit it or not, ride-sharing service has already become an indispensable part of people’s life, especially in the metropolis. Ride-sharing service has already been so widespread that it has already become as essential as electricity, water and gas. At Yidao, our goal is to let our users use 100 times a year on average. If so, ride-sharing service will be indeed a high frequency service and part of the infrastructure in any city.
It follows that a service of such frequent demand might have a dominant say in the future development of the entire automobile industry. We didn’t expect such influence when we started, but gradually developed such idea in 2014 and became even more certain now. There are so few platforms that can cover so huge number of users in China. I believe ride-sharing service will be a crucial factor in the future development of the automobile industry, known as the biggest in the industrial circle. Statistics suggest that the overall market volume of the global automobile industry, including the petroleum industry, has already surpassed $3 trillion. If a rising Internet service can have so dominant say in the industry, we can understand why so many people are investing in the ride-sharing industry, almost insanely. After all, there’s so much potential out there.
At the same time, competition in the industry are so fierce, though all the platforms have to face the external pressure, such as government policies. Yet, why are we still so motivated and bold to expand our business? On the one hand, we are all driven by the same vision and goal; on the other hand, we all realize the huge business potential of the market. Statistics suggest that over RMB 20 billion were spent in the industry in 2015 owing to the “money-burning” subsidy strategy. We used to believe that 2015 was the peak, and the “fever” would gradually decline since 2016. It turned out that only more money (over RMB 50 billion, according to some estimates) will be spent in 2016 owing to the subsidy strategy. Imagine the huge pressure for all the platforms! However, we have no choice but to march on, expedite our transition, bring out more innovation and make steady progress. Only then can we stand out and have a say in the future development of the automobile industry.
The cooperation between Yidao and LeTV
After LeTV invested in Yidao half a year ago, we have become more proactive in the market, even than our rivals. On the one hand, we lowered our price; on the other hand, we developed all kinds of marketing strategies to encourage users to charge their accounts. For example, at first, they could get another RMB 100 if they charge RMB 100. Later, they could get RMB 120 if they charge RMB 100, and get a TV set if they charge RMB 10,000. What makes Yidao so “aggressive”, you might wonder?
At this point, I want to briefly introduce to you the cooperation between Yidao and LeTV. For Yidao, LeTV provides us a great room for development. Yidao has acess to LeTV’s entire ecosystem, ranging from hardware (smartphone, TV, and automobile), content (film and TV series, music and sports) to e-commerce platforms and thousands of offline stores, which provides Yidao with so huge room for further development and expansion. For example, Yidao’s users might be able to get something made by LeTV instead of another RMB 100 if they charge RMB 100 to their Yidao account. At the same time, we could fully explore the potential of LeTV’s VIP member system and provide better services for LeTV’s users. In addition, we can make use of LeTV’s resources and carry our more interesting and efficient subsidy strategies, so that we can win over users through our creative marketing activities.
More importantly, there’s a lot for Yidao to learn from LeTV’s ecosystem and business model. To summarize, our goal is to “keep up to the trend in ride-sharing industry, focus on the internet platform, hold user value as our guiding principle, integrate external resources and establish a mature business model”. Although you might find these words “empty” now, I have every confidence to believe that we can hand in some pretty awesome results in the latter half of 2016 as our cooperation with LeTV deepens.
[The article is published and edited with authorization from the author @TMTpost-Chinese, please note source and hyperlink when reproduce.]
Translated by Levin Feng (Senior Translator at PAGE TO PAGE), working for TMTpost.