Ho Huy: Taxis adapt to survive

Ho Huy: Taxis adapt to survive

Mai Linh and the so-called ‘superiority complex’

Four years ago, when foreign ride-hailing apps like Grab and Uber had yet to enter Vietnam, Mai Linh Group was a key player in Vietnam’s taxi transport scene.

Things have changed radically since both foreign firms gained a foothold in the Vietnamese market. Traditional taxi firms were caught unawares and Mai Linh incurred a drop in revenue of more than 30 per cent, while several thousand of its drivers quit their jobs to join the foreign newcomers.

Unlike most local competitors, Mai Linh engaged in developing a ride-hailing app of its own quite early, in 2015. The company’s chairman Ho Huy hired capable people to develop the app.

However, the company failed to launch the app in a timely manner, even though they already had it in their hands. The foreign players took advantage.

Looking back, Huy still believes he was doing the right thing.

At the time, foreign tech firms sent people to work with Mai Linh and discuss co-operative deals, Huy recalled. They wanted to take advantage of Mai Linh’s expansive driver network and would have provided the app. The company leaders refused the deal, confident that Vietnamese firms could do it on their own.

Mai Linh management’s refusal is evidence of what some call a ‘superiority complex’, as Huy shared, “If I shook hands with that foreign tech firm, using the partner’s technology and capital injection, paired with Mai Linh’s brand value and expansive driver and car system that is present in 54 localities nationwide, how would other local taxi firms have survived?

“If I agreed to the deal, I might have gotten a lot of money, but would have lost many things. In the future, people would have said that Ho Huy, chairman of Mai Linh Group, teamed up with a foreign partner to drive local taxi firms from the domestic market.”

Turbulent times came after the foreign car-hailing apps made it to Vietnam. Mai Linh saw a remarkable decline in both market share and revenue figures.

Huy, however, remained confident that Mai Linh could manage continual growth leveraging its strong team of around 20,000 well-trained drivers and a fleet of nearly 15,000 taxis operating in 54 cities and provinces nationwide, planning to expand to all 63 localities in the country in the near future.

In part, his optimism came from the fact that foreign car-hailing firms were losing ground in the face of adamant protests from traditional taxi firms in many countries, with Japan as a prime example. The lesson from Japanese colleagues showed that technology could only serve as a platform, while humans were the key factor.

The Mai Linh chairman assumed that when customers have many choices, the group would be able to leverage the advantages from its large driver system in diverse locations and the application of positioning and star marking services between the customers and the drivers, which have made the e-booking service more closely controlled.

In the recent past, thousands of drivers who left the company to join foreign car-hailing companies asked to be allowed to return. Huy said the company has welcomed the drivers, and even wants to train them into more skilled ones, for them to be able to get decent incomes. The next step would be to put them in owner positions, the same way 10,000 experienced drivers of Mai Linh were supported to be able to buy back the cars they drive.

Efforts for restructuring

In mid-2017, Mai Linh founded its Car Tech Centre to bring together the whole system’s drivers, and simultaneously launched Mai Linh Bike, a new kind of service under which the company’s motorbike drivers use a ride-hailing app to drive customers in the major cities of Hanoi, Danang, and Ho Chi Minh City.

About two months after the launch, the new service already boasted more than 10,000 motorbike drivers. The group set a target of reaching one million drivers by 2020.

Mai Linh’s resurgence does not only rely on technology, but also leverages the business model. For more than a decade, Huy conceived the idea of uniting Mai Linh’s units in the country’s three regions into a single one. That ambition came true after the company’s extraordinary general shareholders’ meeting in mid-December 2017.

After the move, Mai Linh now features a compact management model only consisting of one chairman-cum-general director, one deputy general director, and seven heads of departments, instead of having three general directors, three deputy general directors, and several heads of departments as had been the case in the past.

The compact operational model paired with unity in management helped boost Mai Linh’s business efficiency greatly. At present, Mai Linh Group’s operations focus on three fields with corresponding subsidiary companies.

Mai Linh Corporation focuses on the taxi and ride-hailing motorbike driver services.

Mai Linh Willer operates passenger cars, car rentals, and other transportation services through a co-operative deal with Willer, one of Japan’s leading transport groups. It also offers value-added services to customers such as airline tickets, hotel bookings, and pick-up services. It serves more than 13 million passengers annually.

Mekong Xanh specialises in providing materials, equipment, repairs, and maintenance services not only to the cars owned by its drivers, but any cars in demand.

The company has also applied cutting-edge Oracle accounting software, with KPMG acting as the consultant, which allows real-time accounting transactions. Huy said that the use of Oracle software is important in transaction management across Mai Linh’s system, enhancing transparency and saving costs.

“By applying tech solutions and restructuring measures, Mai Linh was able to save VND100 billion ($4.5 million) per month. We have also formed diverse teams engaged in IT, finance, and human resources for daily information exchanges through Viber. Mai Linh has made tech solutions an essential factor for sustainable development, keeping up to date with contemporary development requirements,” Huy said.

The Mai Linh chairman also harbours a plan to join forces with other traditional taxi firms to remain steadfast amid the upcoming pressure of stiffening competition.

“Some taxi firms have proposed co-operation deals with Mai Linh to develop a shared car-hailing app, and then let the customers choose the brand they most like. This model can bring benefits to both users and drivers,” Huy noted.