1. Business Environment of China
Group 1

2. The Challenge Reviewed
The shortage of Taxis in Luo Hu, Shenzhen
• Long Queues
• Tempting to take the “Black Car” -> Unsafe
Opportunity:
• There are people who are willing to pay
more to avoid lines

3. Solution?
A Luxury Taxi 

4. The Business Model
Per Unit Fee
Tax
Fee
Luxury
Taxi
Taxi Companies

5. The Business Model
Per Unit Fee
Tax
Fee
Luxury
Taxi
Taxi Companies

6. How Do we “Add Value”
•Provide the Service of Upgrading Taxis
•Economies of Scale
•Marketing
•Market Targeting
•Etc.

7. How to implement this?
•Introduce in places where the shortage problem is
especially serious, e.g. Border spots / Airports
•Only operate in these places (Destinations are not fixed)
•Coordinate the flows using monitoring system

8. Total Supply Effects
Suppose we have n taxis at Luo Hu at initially.
Now within the n taxis, some (l1) will be upgraded
to be luxury taxis.
If this is the only thing, total supply will remain
unchanged.
However, it is very likely that taxis from other
regions will join the upgrading process (l2).
Thus total supply effects would be:
New supply = n-l1 + l1 + l2 = n + l2
Taxi supply at Luo Hu will increase.

9. To Consumers
•An alternative to waiting in the long line
•Minimize total cost (= money cost + time cost)
•Safe
•Comfortable
•Convenient

10. To the Government
•As a trial of method to alleviate the taxi shortage problem
•The targeted places are usually active spots of black cars,
and thus the business can help contain black car activities.
•If this succeeds, luxury taxi supply can be further increased.
•Approach service differentiation to serve various kinds of
customers.

11. Long Term Benefits / Sustainable?
•Demand is constantly high in the targeted places.
•Numerous potential customers who want to waste no time
•Able to pay higher prices