What President Moon should watch in Chengdu

It was three years ago when this reporter traveled to Chengdu in Sichuan province of China several times for business reasons. In China, provincial governments manage the total amount of taxi licenses like the way we do. Due to rapid urbanization, however, the demand is outstripping supply in most regions. Thus, this reporter mostly used a local car hailing service called “Didi Dache” while staying in town.

One day, when this reporter called the service, there was no reply for over 10 minutes. While thinking of hailing a taxi instead, I got a message,, “Sorry for a late reply. We have paid 10 yuan (which is equivalent to some 1,600 won) into the caller’s account to compensate for the delayed service.” About five minutes later, a driver of Didi Dache arrived. The fees were 16 yuan (around 2,700 won). As this reporter received 10 yuan as compensation and paid 16 yuan for the service, it means the service only cost six yuan. Still, it wasn’t all about money. The company sought compensation and satisfaction for consumers in various ways. For example, Didi Dache compensated the user for his lost time that day. A service like this cannot be found in South Korea.

On another day, while eating dinner, we found we needed some goods including water. Then the owner of the house searched on a supermarket delivery application on his smartphone. When he typed in what he needed, the app displayed the prices of goods suggested by small and large supermarkets across Chengdu. Users can just pick one considering the time for delivery and price, and most tend to choose a store closest to their home. The delivery of items is done by supermarkets themselves, not by delivery app operators.

President Moon Jae-in is set to visit Chengdu for a trilateral summit between South Korea, China and Japan this month. The Chinese city can be likened to somewhere in Gangwon Province, and while it is famous for having been the capital of Liu Bei’s Shu Han during the Three Kingdoms Era, Chengdu has an image as a remote region within China. Still, together with coastal cities, Sichuan province is where the pace of growth is the most fastest driven by the initiatives of the central government. There’s even a saying that all elevator manufacturers in China are looking at Chengdu, which has seen increased demands for urban development.

What was impressive about Chengdu was not such hardware, but innovation in services. While we haven’t been able to resolve issues associated with a ride-hailing app Tada, Chinese people have been already using ride-sharing services with an established compensation system for over three years. Didi Dache has grown into a comprehensive mobility company called Didi Chuxing by merging with its former competitor “Kuaidi Dache.” Valued at 56 billion U.S. dollars (around 67 trillion won), Didi Chuxing was ranked third among 346 unicorn companies across the globe, according to research company CB Insights. The firm also acquired Uber China. Meanwhile, taxi fares in South Korea rose even before ride-sharing services were introduced, and the related business with 1.5 million users is now facing a crisis of shutting down.

A supermarket app in Chengdu reveals a possibility of protecting and nurturing small business owners following market principle. While the South Korean government has intervened in the opening of large-size supermarkets and is seeking a compulsory closure of shopping malls for the sake of mom and pop stores, new technology is allowing small businesses to bloom in China without the government’s involvement.

This reporter hopes that President Moon and his aides can witness themselves such innovation taking place in Chengdu. More fundamentally, it would be a good chance for them to feel how the Chinese businesses’ desire to thrive in the market is being used to the benefit of consumers and is leading themselves to success. The South Korean government recently said it would come up with measures once again to reinvigorate the country’s service industry next year. In socialist China, the market is doing all the work even without such measures.


koh@donga.com