Uncertain future
Zhao pointed out that there is another benefit to using these apps.
To compete for users, e-hailing app companies have been sending out various rewards and gifts. For instance, Didi Taxi promises to deposit 5 yuan to drivers' phone accounts for each user to whom they recommend the software.
An app called Baimi Jiaoche (literally "getting the cabs within 100 meters") offers taxi drivers three months of free use of tablet PCs, and these tablets will continue to be free if the drivers recommend the software to five users each month.
These rewards have helped build up users for these companies, but none of them have started making a profit yet.
Zhuo at Didi Taxi told the Global Times that the company does not expect to charge any fees in the next three years, and at present the company will focus on "product improvement and market expansion."
Yaoyao Taxi, another e-hailing app company, started up with support from investors. The company secured several million dollars in financing from Sequoia Capital in December, but it also makes no profit at present.
"Initial investment in the sector has been huge. The cost of developing users has accounted for 80 to 90 percent of the total expenses," said Yan Xiaojia, an industry analyst at consultancy Analysys International, noting that such a development model is distorted.
Experts noted that the e-hailing companies may be able to make money from advertisements as their user base grows, but the fierce competition as well as the unclear business model of these apps will soon erode investors' interest in these companies.
"Investors generally hold a cautious attitude toward these taxi apps, and their investment is also very small, generally less than 10 million yuan," said Li Yi, secretary-general for the China Mobile Internet Industry Alliance.
Taxi appointment app companies point out that the market is huge. There are around 2 million taxis hailed in Beijing each day, with only 30,000 or 40,000 of them hailed via reservation apps.
"However, the market cannot accommodate so many players. I believe that those who lack sufficient capital and operating expertise will soon be phased out," said Zhuo, noting that only two or three apps are likely to survive.
Li said that the market as a whole is facing many uncertainties. "Taxi companies may also launch their own apps, as they own the key assets in the sector - the taxis. Mobile Internet companies are only fostering the market for taxi companies."
Experts noted that as the market grows, big Internet companies or wireless operators may also step in. Tencent's WeChat instant messaging service has begun cooperating with an e-hailing app to offer taxi reservation services.
Taxi companies, meanwhile, have their own old-fashioned telephone appointment services. Didi Taxi is now working with Beijing's city dispatch center and sharing its orders with the dispatch phone line.
Heavy rain affects traffic in S China
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