Voting with their hooves

Yeh Young-june
The author is an editorial writer of the JoongAng Ilbo.

Caocao Zhuanche has joined the fast-growing ride-sharing business in China. Although first mover Didi Chuxing dominates the app-based car-hailing market, the privately-rented public taxi service of Caocao is backed by carmaker Geely, which supplies the fleet of electric vehicles. It is like Hyundai Motor having its own mobility operation, which is unthinkable in Korea as carmakers are banned from the rental industry. Instead, Hyundai Motor has been testing its mobility capabilities in Irvine, California.

Hyundai cannot ignore the new branches of the mobility industry just because of regulations on its home turf. All global automakers including Daimler-Benz, BMW and Toyota are active in new mobility services and solutions. Mobility is the future of vehicles. When self-driving becomes common, there will be no need to keep idle cars in driveways and parking lots. The smart car will be able to drive on its own to pick up family members and even run an extra gig of work driving strangers around. In the future, the typical taxi may cease to exist.

Didi Chuxing was based on Didi Dache, a taxi-hailing app launched by 29-year-old Cheng Wei in 2012. After being frustrated with the difficulty of finding a cab to work at Alibaba, he ended up starting a cab-hailing platform. The response to easy ride hailing in a country in which cabs and public transportation fall far short of its massive population’s needs has been explosive. By 2015, it completed $2 billion in fundraising to become a unicorn and is now valued $5.6 billion. In Beijing today, few hail cars on the streets.

A Tada car runs on a road in downtown Seoul on Dec. 2 when the Seoul Central District Court opened the first hearing on the Tada shared car service case. [NEWS1]

With the fast proliferation of app-based hailing services jeopardizing their jobs, taxi drivers protested heavily. The Transport Ministry stepped up by institutionalizing a new driving industry called “internet-booked taxis” in 2015. That has made ride sharing and car hailing legitimate in China. China however remains fundamentally socialist. It has control over individual lives as well as corporate activities through various regulations. But it is surprisingly open-mined in accepting new business concepts and services. Chinese Premier Li Keqiang said, “Our physical world is incomparably smaller than the unknown. We must not interfere in new breeds of business and models and kill them before they can sprout. Engagement should be the basic approach to a novelty. We can surely address the problems that surface in the development and growth processes.”

The situation is entirely the opposite in Korea. The Red Flag Act that killed the motor vehicle in Britain in the 19th century to protect the carriage industry is the inspiration for many of our regulations. The British transportation act required people to run with red flags alongside motor vehicles on the roads. As a result, the automobile industry in the birthplace of the industrial revolution fell behind the United States and Germany.

Speed in removing regulations is essential in stimulating innovation. That comment came from President Moon Jae-in, not Lee Jae-woong, CEO of car-sharing company Socar, who is fighting with legislators, the government and courts to keep alive his van-hailing service, Tada. What has happened with Tada is exactly the opposite of what the president has stated. Tada executives have been indicted for an “illegal” ride-hailing service. Even as the case is in court, the legislature is rushing to pass a revised passenger transportation act that will virtually put a stop to Tada’s service.

We live in a transitional period leading to the fourth industrial revolution. Laws cannot keep up with the changes during such a stage of evolution. It is hard to reconcile the unfamiliar with the existing regulations. New York Times columnist Thomas Friedman said, “If horses could vote, there would never have been cars.” Politicians should fix laws or make new ones to pave the way for new industries and services. Banning services like Tada underscores how backward Korean politics is. What the government and politicians are doing in Korea ahead of the election in April is more or less trying to find a way to allow horses to vote.