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Business Trends

South Korean taxi drivers strike against ride-sharing

Kakao's latest service puts government under pressure to loosen regulations

A taxi driver takes part in a protest against a carpool service application that will be launched by Kakao Corp later this year in Seoul on Oct. 18. The banners read, "Stop carpool service application, it is illegal business".    © Reuters

SEOUL -- Tens of thousands of taxi drivers staged a one-day strike in downtown Seoul on Thursday, rallying against Kakao's ride-sharing service in a bid to prevent the government from easing already strict regulations.

About 60,000 cabdrivers from the capital and provincial areas marched at Gwanghwamun Plaza, chanting, "Illegal ride-sharing app out!"

"Taxi drivers are fathers, mothers and children," said Park Won-soo, president at Self-Employed Taxi Drivers' Association. "We came here to say that we want to have three meals a day with our family."

The rally comes as Kakao, operator of the country's most popular chat app, KakaoTalk, is recruiting drivers for a ride-sharing service.

Because of the hubbub, Kakao has suspended the introduction of the peer-to-peer service.

South Korea has some of Asia's tightest ride-sharing regulations. Regulations allow ride-sharing services only during peak commuting times. The government has been under pressure to loosen its grip on the fledgling industry but remains reluctant in the face of strong opposition from taxi drivers and other interest groups.

Kakao says there is more demand for rides than the current number of taxi drivers can handle in the mornings and evenings, and that it wants to help resolve the situation. Kakao offers taxi-hailing, parking and GPS services through its Kakao T app.

Taxi drivers take part in a protest against a carpool service application that will be launched by Kakao later this year in Seoul on Oct. 18.   © Reuters

"There is a mismatch in demand and supply during peak commuting times," said Yoon Seong-jae, a manager at Kakao. "We believe that we can help reduce the imbalances. ... We will continue to have dialogue with the taxi industry to listen to their opinion."

Analysts say Kakao's ride-sharing service can be profitable.

"Kakao is set to have profit models through ride-sharing and premium taxi-hailing services this year," said Hwang Seung-taik, an analyst at Hana Financial Investment.

Park Kun-young, an economist at Kyobo Securities, said Kakao has the potential to grow further but needs some government cooperation. "We expect fast growth," Park said, "if regulations are eased."

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