Why hasn’t ride-hailing found success in Taiwan?

In Taiwan, Uber hasn’t been able to make themselves indispensable enough to get by local regulators

I’ve just finished the first week of my summer internship at AppWorks in Taipei and I’m loving it so far! Living in Taipei has been just as I imagined and I’m really going to enjoy it before going back to New York in the fall.

One of the biggest lifestyle differences I’ve noticed between being in New York City and Taipei is: I’ve found myself using traditional taxis in Taipei, yet I can’t think of a single time I’ve hailed a cab in New York, instead opting for ride-hailing services like Uber or Via. In fact, Taipei is probably the only place I’ve used a traditional taxi in the last five years (excepting Mainland China, where I wasn’t able to use Didi without a Chinese bank account).

And it just so happens that Taiwan has been a giant headache for Uber, who will have to rethink its operations in Taiwan entirely after the Ministry of Transportation and Communications re-affirmed that Uber, as it is currently licensed, must operate as a rental car company and charge passengers by the hour (or day), regardless of the length of their trip. Furthermore, as rental car drivers, Uber drivers would not be allowed to drive around waiting for the next ride — they would have to drive back to the rental car lot before initiating another ride. This, clearly, would render Uber’s business model inoperable. Uber has four months to comply before the fines start rolling in.

I don’t think it’s a coincidence that Taiwan has been a place where I haven’t missed ride-hailing apps at all and is also a place where Uber is having such difficulty.

In other markets, Uber and other ride-hailing apps went in and became essential before local regulators could react. By the time regulators wanted to step in, ride-hailing companies had mobilized users into their own political base, making it politically difficult for regulators to protect local taxi companies and stamp out ride-hailing companies.

Why hasn’t the same thing happened in Taiwan? I’ll make some observations and compare it to the US:

  • Public transportation is convenient, non-stigmatized, and pleasant. This is not the case in many US cities. Where I spent most of my life in Columbus, Ohio, public buses were avoided as dangerous and “for poor people”. I would say at least 95% of my college classmates had never ridden the bus before, despite it being free for students. The same applies for my classmates at Columbia (which is near/in Harlem), where in my experience the buses are mostly used by low-income riders. The New York subway, while used by most, is dirty, old, and unpleasant compared to most other subway systems. Some of my classmates avoid it at night for safety reasons.
  • Cabs are plentiful. It has been so easy to find an empty cab at all times of the day and night in Taipei that I was actually concerned about their occupancy rates (it’s a decent 68.4%). Contrast this with pre-Uber New York, where illegal “gypsy cabs” were rampant because traditional cabs were often frustratingly hard to get.
  • The lack of competition in ride-hailing services led to higher fares. Interestingly, from what I can tell Uber is the only major ride-hailing company operating in Taiwan. Didi made an attempt before leaving last year after being deemed an illegal service. I conjecture that the price wars and driver/rider subsidies which had produced artificially low fares in other cities did not materialize in Taipei, so ride-hailing fares were not so low that enough people developed the habit of calling an Uber instead of looking for a cab. I still remember five years ago when Uber and Lyft were giving away ride credits left and right, on top of already-low fares.
  • Taiwan cabbies have more integrity compared to cabbies in other countries. The last time I took a cab in the US was in Las Vegas, getting from the airport to our hotel. The conversation was pleasant, and the car was clean enough, but unfortunately the driver took the “scenic route”. After I declined to tip the driver, the driver called me out and I told him I didn’t appreciate being long-hauled. He could only look down in shame. This is, of course, common treatment towards outsiders in many places. Most cabbies are not like this, but one experience had me swear off traditional cabs and made me a loyal Uber user. Before starting my internship I spent a week as a tourist in Taipei with family and we took plenty of cabs and this never happened. Drivers were pleasant, helpful, considerate, and honest. In other words, how Uber drivers behave in the US.
  • Tipping is not part of the culture in Taiwan. Honestly, tipping is my least favorite thing about America. It is mostly uncomfortable, forced, and insincere. Although ride-hailing apps have now added tipping functionality, the experience is cashless and tipping happens through the app after the ride ends. No awkward face-to-face tipping. This has never been an issue in Taiwan, where you only might be inclined to round up to the nearest NT$10 as a form of appreciation.

So although Uber in Taiwan has offered a useful service at a cheaper price, I believe the factors above have contributed to the political feasibility of Taiwanese regulators blocking Uber from operating as they do in other countries. The Taiwanese people haven’t protested regulations to the same degree as other countries because a life in Taiwan without Uber is still pretty convenient, which is something you can’t say about the US.

Associate at AppWorks