Roadblocks for ride-sharing

In an age where young millennial would prefer to ditch cars for smartphones , you’d think that traffic would die down a bit. But Generation Y still needs to get from point A to B. Many countries like China and Korea, even with all their advanced public transportation, still suffer from major traffic congestion in small places.

For all intents and purposes, cities like San Francisco and New York have become model cities for startups trying to penetrate the ride-sharing and car sharing market. Maybe it was due to a combination of poor drivers, lane-hogging bikers, and nearly nonexistent parking. Whatever caused it made the market ripe for the recent surge of ride-sharing and car sharing services that hit the Bay Area.

The disruption in the economics of commuting are making many startups scramble to take market share in places like South Korea and China, but the governments in those respective countries have also been putting up a bit of resistance… for good reason.

In cities like San Francisco, the rise of public ride-sharing services have severely impacted taxi use. Less people took taxis to get around because ride-sharing startups offered faster, more responsive services at affordable prices. Many taxi regulators have resorted to legal roadblocks instead of responding with eye-to-eye technical innovation. Uber is attempting to soften the resistance by creating incentives for currently existing taxi services.

Despite facing much pushback from local government regulations in, Uber’s act-first-ask-for-permission-later approach has helped it gain a competitive advantage in countries like the U.S. However, that approach may not work as well in Asia, especially in countries like China where government cooperation is much more crucial. In addition to working with government officials prior to launch, Alibaba-backed Kuaidi secured crucial partners in China before launching and has been seeing rapid expansion in over 40 cities over the past year. 

Seoul city council sentiments still echo that of disapproval over creating competition for taxi drivers and the Korea’s Ministry of Land, Infrastructure and Transport has deemed the ride-sharing service component of startups like UberX illegal. However, car-sharing services seem to face less opposition, as indicated by the more positive reception of South Korean startup SoCar.

Despite all the regulatory pushback, the consumer approval of ride-sharing services can’t be ignored. Neither parties seem to budge, but cooperation is the name of the game if Kuaidi is any indicator. What else will it take to get there in Korea?