From "monopoly" to monopoly - the development of taxi industry

From "monopoly" to competition

The first real taxi company in New China was the state-owned Capital Automobile Company founded in 1951, which was mainly to meet the needs of foreign affairs reception and other activities. In 1956, with the completion of the three major reforms, the private taxi industry that survived during the Republic of China was incorporated into the national track, and the public-private partnership of the taxi industry was realized, and the first "monopoly" stage of the taxi industry began.

During this period, the general public basically did not use taxis, because the cost was high and the price was expensive, and the other was that buses and bicycles were the mainstream mode of travel. Therefore, taxi to foreign guests, overseas Chinese and other groups as the main object of service. The taxi that is now understood as "waving and stopping" did not exist at that time, but used a "fixed-point passenger" method.

Taxi was criticized as a "decadent bourgeois lifestyle" during the "Cultural Revolution" period, and once suffered a severe contraction, but gradually recovered after the reform and opening up. With the change and loosening of the policy, the taxi industry has been given opportunities for development. In the late 1980s, a number of state-owned and collectively owned taxi companies emerged, while some individual taxi licenses were issued. However, at this time, taxis were still only a luxury for high-income or special status classes, and had not yet become a choice for people to travel.

In 1992, the Beijing Municipal government put forward the slogan "One wave can stop five taxis" to solve the problem of taxi difficulty, and the taxi industry began to open up to private capital, a large number of private companies were established, taxi drivers contracted with these companies, obtained the right to use the car, and paid a certain amount of "management fees". The rest of the revenue goes to the driver - the "management fee" paid to the company becomes what is now commonly referred to as "subscription money." According to statistics, by 1994, there were more than 1,400 taxi companies in Beijing, and the number of taxis reached 60,000. During this period, although the driver has to pay "subscription money", due to the fierce competition and high demand, taxi drivers have become a good job.

In 1994, due to the chaos caused by fierce market competition, such as "carpooling", refusing to take a ride, rifleing customers, and competing for "territory", and also due to the special public nature of taxis, the government intervened to limit the total number of taxis in the city, and the total number of taxis in Beijing has been maintained at about 60,000 in the following 20 years. During this period, the rental price of taxis per kilometer began to adjust upward, and more importantly, in 1996, the Beijing Taxi Administration issued the Notice on Strengthening the management of Enterprise Operation tasks Contract, taxi enterprises implemented contract management, the original taxi drivers to the company to buy the vehicle will be recovered, while the taxi "contract fee" significantly increased. In the 21st century, Beijing taxi companies have undergone large-scale mergers and reorganizations, from more than 1,000 to about 200 today. In this way, since the new taxi companies basically can not survive, the competitive pressure of taxi companies is relatively smaller, and the monopoly advantage is relatively expanded. Due to the franchising of taxis, illegal "black cars" are suppressed, and dried taxis have to charter cars to these companies, so the companies begin to expand, intensifying the exploitation of drivers. Mainly by increasing the amount of "contributions". The big companies have monopolies and franchises that exploit taxi drivers, block government reforms, make more money rather than innovate, and even become a relatively independent interest group.

From competition to the monopoly of "private" capital

However, the position of this interest group was disrupted by the Internet storm. The exponential expansion of mobile networks and smart phones has created material and technical prerequisites for the development of online car hailing. Founded in June 6, 2012, Beijing Xiaoorange Technology Co., LTD., founded the "Didi Taxi"; In May of the same year, Hangzhou Kuaizhi Technology Co., Ltd. was established, and in August, "Kuaidi Taxi" was listed in Hangzhou. Subsequently, the two online car-hailing companies merged small companies, cooperated with Tencent or Alibaba, fought for taxi companies, invested huge subsidies to attract users, and rapidly increased the volume and scale, developing into two giants in the field of online car-hailing in 2014. Various online ride-hailing companies have also established their own private car business, whose low "subscription" amount and attractive conditions have attracted many taxi drivers to jump ship, and beat traditional taxi companies with their increasing market share.

In early 2015, Didi Dache and Kuaidi Dache announced a merger. The new company holds more than 90 percent of the market share of the ride-hailing industry. The international network car giant Uber has also joined the chess game to compete for the Chinese market, and the types of network car services have also emerged, such as hitch, express, senior car and so on. In order to avoid profit compression caused by competition with large enterprises, Didi Kuaidi and Uber China also decided to "shake hands and make peace" in 2016, after the news leaked through various channels, finally announced Didi's merger plan for Uber China in late July and early August 2016. If the government's permission is obtained, then China's online ride-hailing market will form an oligopoly of "Didi Chuxing", and in the taxi industry, it will form a pattern of both traditional taxi companies and "Didi Chuxing".

The Chinese government has gradually accepted the fait accompli of the rapid development of online car hailing. On October 8, 2015, at the "Shanghai Innovation and Exploration of Car Rental (private car) Model under the Sharing Economy" sponsored by the Internet Society of China and Didi, the Shanghai Municipal Transportation Commission officially announced the operation qualification license for Didi Kuaidi's private car platform. This is the first domestic car platform qualification license, Didi Kuaidi has also become the first company to obtain the network car rental platform qualification. At the end of July 2016, the "Interim Measures for the Management of Online Booking Taxi Business Services" was finally issued, officially recognizing the legal status of private cars. It is not difficult to see that according to the current trend, traditional taxi enterprises are getting worse and worse, and the "marriage" of Didi - Uber will further enhance its competitiveness, and under the role of market laws, traditional enterprises that lose administrative protection will be completely squeezed out of the taxi market. A second monopoly must thus be established.

3. Breaking monopolies OR "popularization" of monopolies?

Believers in the free market see monopoly as the enemy. It is true that with monopoly, the law of value is difficult to play a full role, and the "indicator" of market supply and demand - price, seems to become the "plaything" of the monopoly. They advocate "breaking all monopolies," while in China, the emphasis is on breaking the "monopoly of the state." But the way they broke it was actually to replace the old state monopoly by a monopoly formed in so-called "free competition." Some contemporary media and "social conscience" are outraged when it comes to the traditional taxi monopoly and government franchise, while when it comes to the monopoly of "private" capital, they begin to look around and talk about it, only to respond with "false" or soft criticism, and the anti-monopoly "vanguard" has disappeared. In fact, some people are not even "against all monopoly", but only against "state monopoly", only against "public" monopoly. Their class position speaks for itself.

"One of the defining features of capitalism is... The concentration of production in larger and larger companies is happening very quickly." With the massive concentration of capital, "competition turns into monopoly." There has been tremendous progress in the socialization of production."

The formation of the second monopoly in the taxi industry is a vivid reflection of the following statement: "Free competition creates large production, suppresses small production, and replaces large production with greater production, so concentrating production and capital to such an extent that monopolies have arisen and are still arising from them." But what used to take decades to create an industry monopoly is now done in just a few years. (Quote from Lenin's "Imperialism is the highest stage of Capitalism")

In the eyes of communists, monopoly is the inevitable trend of free competition and the objective development requirement and result of the socialization of production. A monopoly is "a transition to a higher system." Once a monopoly is established, the strategies of low-price competition and subsidies that have benefited consumers and hired drivers so much will disappear, as will the incentives for technological innovation touted by free-market worshippers - why invest in innovation when the monopoly position and advantages are enough to sustain profits? More and more private car drivers have felt the "insolence" and "unreasonable" of the once amiable "private" capital, in the face of the capital giants from the people, consumers' complaints and concerns about the cancellation of concessions are only the "reform pains" they must carry out to maximize profits.

The concentration of the means of production and the socialization of Labour have reached a point where they are incompatible with their capitalist shell. This shell is about to blow up. The death knell of capitalist private property is about to sound. The deprived are to be deprived. The capitalist mode of possession arising from the capitalist mode of production, and hence capitalist private property, is the first negation of private property based on the individual's own Labour. But capitalist production, due to the inevitability of natural processes, creates a negation of itself. It's the negation of the negation. This negation is not the re-establishment of private property, but the re-establishment of individual property on the basis of the achievements of the capitalist era, that is, on the basis of cooperation and common ownership of the land and of the means of production produced by Labour itself." (Quotation from Marx's Capital, Volume 1)