Vietnam’s taxi industry is a jungle, and foreigners and locals alike can recall stories about being fleeced by drivers with dodgy fares. For me, it happened late one night and it was only after I was halfway home that I realised, in my mojito-induced haze, that the taxi’s meter was ticking over faster than my wristwatch. Luckily, being six-foot-tall, I was well placed to renegotiate the exorbitant fare.
But there are plenty of stories, particularly from unsuspecting tourists, that have not ended so nicely. Over another mojito one night I was told of how a pair of honeymooning Aussies, who had never been overseas before, got into a taxi at Noi Bai airport only for the driver to stop three times on the way into the city to demand increasingly exorbitant fees — US$50 first, then another US$80, and finally US$100. After this sort of welcome, the couple refused to leave their hotel and booked an early flight home.
In response, local authorities in Hanoi have set up hotlines for violated customers to lodge complaints. There has also been a widespread crackdown on ‘fake’ taxis claiming to be part of non-existent taxi collectives. Some of this has worked. Some of it hasn’t.
Such dramatic stories are, of course, the exception. But the arrival of Uber has offered people in Vietnam a different option. A safer, cheaper and more reliable option, backed by a multi-billion-dollar enterprise with a militant philosophy on customer service.
So, What is Uber?
For those who don’t yet know, Uber is a crowdsourced ride-sharing service that is currently taking the world by storm. Commuters download the service’s smartphone app, register their details, and then lodge a request for a car. That request is then forwarded to the nearest available driver who then makes the pick-up. The app also specifies the car’s license plate, provides a photo of the driver and allows you to track the car on your phone using GPS to avoid any mishaps.
Most importantly, the idea of dodgy meters is virtually non-existent with Uber. And by virtually, we mean payments are done online, with Uber calculating the cost of the fare by the service it offers, the journey time and sometimes the distance travelled. However, fares are also dictated by supply and demand, and Uber has faced strong criticism for increasing its prices when demand is higher; most recently during the Sydney Siege in late 2014 when the higher demand created by the terrorism incident caused fares to skyrocket.
Uber has also attracted considerable controversy in many of its markets that have tried to slam the door on the eager upstart. It’s actually banned in a number of cities, but with its value sitting at around US$41.2 billion, Uber has plenty of capital to lobby governments while commuters continue to demand its services. Although the Vietnamese authorities initially declared its operation here illegal, they have since made public statements indicating their eagerness to embrace the e-commerce service provider.
Uber in Vietnam
As is often the case with the Vietnamese market, Uber’s entry into Vietnam has been regarded with a mix of suspicion and intrigue. Uber’s Hanoi-based general manager, Dzung Dang, says that the app has been popular with consumers at both ends of the market: both those who are price-conscious and those who crave the experience of luxury and status.
“We’ve had an incredible response from customers in Hanoi,” Dzung says. Consumers in Hanoi tend to be more prudent than their Ho Chi Minh City counterparts, but also place a high premium on luxury experiences, he explains.
Dzung also says that there are a high proportion of underutilised cars in Hanoi, which makes it a promising market for Uber. “A lot of wealthy people own cars but those cars aren’t being used at all times during the day. Uber helps drivers and owners earn extra income by tapping into underutilised capital.”
Vietnam’s commercial hub Ho Chi Minh City has been a boon for the Silicon Valley-based company, with most of the company’s drivers based in the southern city. As has been the case in other markets, Uber has had a transformative impact on the way Saigonese commute on a daily basis.
Daniel, who manages a bar in Ho Chi Minh City’s District 1, says that the high level of convenience and competitive pricing of fares (Uber’s base fare is VND5,000 plus VND800 per minute and VND9,597 per kilometre) has encouraged him to use Uber every day to get to and from work.
“There’s no dicing with the fare and there is a big supply of cars that make it pretty easy to get around,” he says. “The ease of using the app and the reliability of the rating system is also a big incentive for most people. I use it way more than I’d use a taxi.”
Let the Rivalry Begin
That’s not to say that Uber’s entry into Vietnam hasn’t been difficult. They’ve faced fierce competition from two major taxi apps: GrabTaxi and EasyTaxi. Some Hanoian customers also argue that Uber’s supply of cars is too limited to offer round-the-clock convenience like it does in Ho Chi Minh City. This has allowed GrabTaxi, which entered Vietnam at the beginning of last year and secured an early mover advantage by signing up hundreds of cars to the app, to remain a popular alternative.
Uber’s real competition, however, are the taxi companies. Unlike Ho Chi Minh City, where there are only two main taxi providers, Hanoi is home to a plethora of taxi companies all vying for a slice of the transport market. This fierce rivalry for market share led to difficulties for Mai Linh Taxi, which in 2012 was reported to have sold off around 1,000 cabs in order to raise capital and stave off bankruptcy. Hanoi’s taxi lobbyists have also waged a fierce war on the app, decrying the lack of regulation as a threat to public safety, pointing to alleged incidents of assault by drivers in India and Australia. But taxi companies have also complained that Uber’s call-on-demand functionality has undercut existing business dealings major taxi companies have with Hanoi’s largest buildings, malls and apartment complexes that afford them exclusive service rights.
Dzung says this fragmented allocation of market share has made it easier for the app to break into the market and begin winning over customers, with the help of strong word-of-mouth and savvy pull-marketing campaigns.
“We don’t employ any push-marketing measures — only pull,” he says. “For Valentine’s Day we had Uber cars driving around Hanoi with huge teddy bears on the roof. We also had a campaign where we teamed up with the Coffee Bean & Tea Leaf to deliver people’s coffees using Uber cars.”
Such efforts seem to be paying off for Uber, which has captured the imagination of Vietnam’s young, urban classes. Linh, a public relations executive based in Hanoi is a devoted convert.
“I love getting picked up in nice cars,” she explains. “And for the same price of being crammed into a tiny Kia Morningside taxi, I can get a clean Toyota Camry with leather seats and a very polite, professional driver. It’s a far less stressful experience and I don’t have to worry about having cash.”
Nick, a Ho Chi Minh City-based writer, agrees. “I’ve used Uber on a weekly basis for the past six months, and it’s been great,” he tells me one night over drinks. “The cars are cleaner and nicer, and for the most part the drivers are much, much less cave-trollish than typical Saigon cabbies. I’d say about 90 percent of my trips have been five stars, with one notable exception.”
As is often the case with new ventures, there are of course scenarios when Uber hasn’t worked perfectly.
Nick recalls his traumatic experience of trying to get an Uber one night after his appendix burst. “I called an Uber to take me to the clinic. The guy called my phone again and again, screaming for directions instead of looking at his GPS. Then he pretended he didn’t know where Bitexco Tower was and drove around for 10 extra minutes.”
However, when Nick was prompted for a trip review on the app, he entered the complaint and was refunded the entire fare the next day. His driver was also disciplined, an occurrence Nick says would be “almost unimaginable” with a regular Vietnamese taxi company.
“Uber might have its flaws, but it’s still a thousand space-miles beyond the competition.”