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  • Archive for May, 2015

    Uber-Negotiations in South Korea: Where Did Uber’s Negotiations Go Wrong?

    May 18th, 2015  by  Asia-Pacific Global Research Group - Jasper Kim

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    Uber Technologies, famous for its cutting-edge taxi app service, has officially suspended services as of March 6, 2015 in Seoul, South Korea. Uber Technology’s service, which allows for shared rides, has been attracting controversy in several countries. From its purview, the Seoul local government has offered rewards of 1 million won to anyone who can show proof of Uber-affiliated ride services, a move which has forced the company to take a step back to maintain a foothold on the peninsula.
     
    While Uber has been spotlighted by the Seoul government for its drivers not being properly licenced to operate as taxi services, a new similar taxi hailing service–a free app by South Korea’s Daum called “Kakao Taxi”–seems to have fully leveraged and benefitted from the Uber-Seoul negotiation breakdown.
     
    Originally an online text messaging app, Daum’s Kakaotalk is Korea’s most popular messaging service, with a consumer base of estimated to be over 35 million people with 94% of market share in Korea in the messaging app. The company is hoping to extend its reach into tertiary services. While the Seoul government is contemplating launching its own separate similar app, so far city officials seem to have had little problem with the Kakaotalk version.
     
    So where did Uber go wrong and Daum do right from a negotiation perspective?
     
    This is a classic example of the concept of ‘Integrative negotiation’ in negotiation theory – which is basically when the interests of two parties brings them together for mutual gain, making the negotiation a collaborative effort rather than a competitive one. Roger Fisher and William Ury have spoken about this theory in their book “Getting to Yes: Negotiating Agreement Without Giving In,” (Penguin Books, 1983) where the authors explain that looking for an integrative solution to a problem works as a better negotiated solution than finding a distributive (competitive) solution. In this particular case, it obviously works to the advantage of both the Seoul Government and Kakao Taxi to allow Kakao’s app to continue. Kakaotalk Taxi seems to meet the security parameters set by the government, while providing customers with an easier way to hail cabs, which can only gain approval with and for the Seoul municipal government.
     
    Conversely, Uber’s relationship with the local government could have been more integrative (cooperative) in nature. However, the continuance of operations by Uber in Korea without direct communication with the Seoul municipal government led to increasing conflicting interests. This is despite the fact that Uber had maintained from the beginning that it only had consumers’ interests in mind from the start by offering a viable value-added alternative to traditional taxi ride services. Arguably, however, such sole focus on consumers may have led to a costly lack of focus on municipal regulatory regimes, particularly in South Korea, which historically has a governance culture of strong state influence. Perhaps in realization of this, Uber has recently released a statement that they will try to work more collaboratively within the regulations set by the government.
     
    How does Kakaotalk Taxi differ from Uber? Customers can forward their location to friends and family, ensuring their safety, a detail that seems to have gone down well with the Seoul government. In this fashion, Kakao’s Taxi app is matching shared negotiation interests not only with the government but directly with customers, which seems to be Kakao’s formula for success. Additionally, Kakao Taxi’s app has at least initially been successful because of its large consumer base and fan following based on its free text messenging service, a resource any competitor may find it hard to tap into or replicate in South Korea.
     
    One of the major downsides however, seems to be the problem most applications suffer from in Korea – the lack of any language options outside of Korean. With the addition of new languages, the application could make an excellent case for itself among the growing expatriate and tourist community.
     
    Whether with little competition or not for online taxi hailing services in South Korea, as long as the average Seoul citizen is gaining in the bargain, the addition of Kakao Taxi and perhaps one day Uber will represent a win-win-win negotiated outcome scenario.
     
     
    Juhi Mendiratta is a PhD candidate at the Graduate School of International Studies, Ewha Womans University (Seoul, Korea)

     
     
     
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