The lack of a contingency plan has hurt the reputation of Didi, the blue whale of China’s ride-hailing market

The article Didi’s loss of trust has industry-wide consequences was written by Jiefei Liu for TechNode.

The death of a 20-year-old woman who was raped and murdered while using ride-hailing firm Didi’s carpooling service last week has triggered renewed outrage. The company suspended its Hitch service on Monday following the death of a second female passenger within the past four months, saying it would only resume operation after all safety issues were addressed.

On August 24, the passenger surnamed Zhao was on her way to a birthday party in southern Zhejiang province. During the trip, her Didi driver navigated to a secluded mountainous area, coerced her into transferring around RMB 9,000 to him, and then forced himself on her before taking her life.

While safety issues are a sector-wide problem, the murders have drawn the ire of government officials and the public alike for creating an environment in which harassment and killing are possible.  Most notably, the company’s customer service staff have faced scrutiny for their poor handling of this case and others.

After realizing something was amiss, Zhao contacted her friends, pleading for help. They, in turn, notified Didi’s customer service team, repeatedly asking for information about the driver. Their requests were met with assurances that the case had been flagged, but nothing more. After the police got involved, they too were made to wait. It took them over two hours to get information about the driver.

A day before Zhao’s death, another passenger, surnamed Lin, allegedly almost suffered a similar fate at the hand of the same driver. However, she grew suspicious and got out of the car, eventually threatening to call the police. Lin took a photo of the car and submitted a complaint to Didi’s customer service department. Staff promised to get back to her but never did.

The failures of the customer service team have garnered increasing amounts of attention. But it is also Didi’s lack of contingency plans if one party cancels a trip that is worrying.

Common cancelations

In both cases, the trip was canceled shortly before or after it started, a common practice that allows drivers to pick up more passengers en route. In Zhao’s case, police reported that she had, for unknown reasons, canceled the journey in the app one hour after the trip began. Didi initially claimed she was never in the car and refused to give any further information. Similarly, Lin canceled her journey at the driver’s request after he said he would be late. Lin agreed because she thought this was common practice among Hitch drivers.

The company launched safety functions like Emergency Help Button with real-time sound recording feature and Itinerary Sharing in July 2016, and the Emergency Help functions were updated in June 2018. However, these features are not available unless a trip is active.

Apart from technical and other shortcomings, the problems are also institutional. The platform has repeatedly been criticized for breeding a culture of sexual harassment. Hitch, which was previously likened to a social network, allowed drivers to view the age, gender, and occupation of the passenger.

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More worryingly, it also permitted reviews of the passengers which often made lewd references to female passengers’ looks and body types, which had been taken down after the murder of the flight attendant. The objectification also extended to its advertising campaigns, in which the company made use of innuendo to attract drivers at the expense of female passengers.

Macro factors

But general macroeconomic factors also need to be considered. China’s slowdown is also affecting jobs and increasing the difficulty of finding employment with adequate income. This is especially true among the younger generation. Despite a record number of graduates leaving university, China’s economic growth fell to 6.7% in 2017, with unemployment in this bracket reaching as high as 30%.

When an air hostess who was also using the company’s Hitch service was murdered in May, Didi’s facial recognition system failed to alert the company that the driver was unauthorized to use the platform. Didi’s vetting practice for drivers is again being called into question. The company claims it collects vehicle and identity information from drivers, and information relating to criminal records every three months from the police. It says those with severe violations of “public safety, public security or traffic safety, or a history of mental illness,” will not be allowed to use the platform.

For Didi, the murders mark a severe breach of trust, exemplified by the increased downloads of apps that facilitate video calls to police. Following the latest apology by the company, in which it promised to devote more time and resources to customer services and develop better contingency plans, internet users questioned whether it was another perfunctory public relations stunt.

Users also began documenting their departure from using the platform on social media, prompting the use of the hashtag #BoycottDidi. As a result, the company’s app fell from 9th to 61st place in the Chinese Apple App Store. It is unclear whether the incidents will cause the company to delay its $80 billion IPO, which is rumored to take place this year.

Government’s concern

But Didi is not just going to have to answer to its customers. China’s National Development and Reform Commission has announced plans to extend the country’s nascent social credit system to the transport industry following the latest murder. This is bound to have far-reaching effects on companies in the sector, which could face extensive cross-departmental punishments for infractions. Officials have called for greater general oversight of the ride-hailing sector, which has had a turbulent few years, with accusations of sexual harassment as well as price wars between major players.

The Ministry of Transport has also weighed in with a list of demands. “These two vicious incidents that have violated the life and safety of passengers has exposed the gaping operational loopholes of the Didi Chuxing platform,” it said in a statement and ordered the company to improve its driver vetting process, among other demands.

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The murders are affecting the industry as a whole. Most notably, mapping company AutoNavi suspended its carpooling service shortly after news of the killing went public. Didi rival Dida also made changes to its service after the last Didi passenger was murdered in May by removing a social networking component from its app.

There is likely to be pushback from local governments around the country. Didi has already been summoned by authorities in ten cities around the country, which require them to address its security loopholes, integrate vehicle and driver data into a government-supervised system, and implement an “emergency SOS” button its app.

However, it is clear that local governments expect compliance by the industry as a whole, and they are seeking greater supervision of ride-hailing platforms. Didi is not the only company that has been summoned after the latest murder. Up to eight other firms are being caught in the net of government supervision.

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