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Business

Smartphone-based services have cab companies worried

GUANGZHOU, China -- Taxi app usage is on the rise in China as the services offer access to more luxurious cars, cut waiting time and cost less than conventional cabs.

Taxi-hailing apps are provoking protests by cab drivers and their companies in Guangzhou.

     While two companies dominate the country's taxi-hailing apps, users are expected to increase as Uber Technologies, a U.S. app company, readies itself for the market.

     Until now, Taxi apps have usually involved traditional cab companies in China. Recently, however, the use of ordinary cars is rising as better vehicle quality and more skilled drivers attract users.

     As competition intensifies, fares and services are constantly changing. Different taxi apps demand different fees, which change depending on the city and also vary weekly.

     Users enter a destination into the app and choose a vehicle, with choices including taxis, ordinary cars, luxury cars and other models.

     The screen then shows the name and license number of the car that will arrive as well as an estimated fare. The user receives a call from the driver after clicking the OK button and they decide on a meeting point. The ride fare is displayed on the app after arrival and paid via smartphone.

     Kuaidi Dache and Didi Dache, backed by Chinese Internet giants Alibaba Group Holding and Tencent Holdings, respectively, virtually monopolize the market. In February, the two apps agreed to merge.

     But Uber is trying to expand its market presence using luxury cars, and more user-friendly services at lower rates.

     Accepting a capital contribution from Baidu, another leading Chinese online service company, at the end of 2014, Uber now operates in more than 10 cities, including Shanghai and Guangzhou. The U.S. app plans to expand its service network to 50 cities within two years.

An Uber app screen

     Uber fares in downtown Guangzhou are half those charged by cabs, and 20% lower than rivals including Didi.

     The average monthly income for Uber drivers is around 6,000 yuan ($966), double that of taxi drivers.

     Uber makes payments to drivers a week after fares are collected from customers. In the meantime, the company invests collected fares, using part of the money to lower customer fees and provide monetary incentives to drivers when needed.

     The number of cabs is decreasing in China as drivers quit to join smartphone-based hailing services. Leading taxi apps said they each receive more than 1 million orders a day on average.

     These kinds of services began only three years ago but already show signs of explosive growth.

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