Caixin
Oct 08, 2016 08:05 PM

3 Large Chinese Cities Eye Tougher Requirements for Ride-Hailing Services' Drivers

Photo: Shutterstock
Photo: Shutterstock

Regulators in Beijing, Shanghai and Shenzhen are considering tighter rules for the ride-hailing industry, including requiring drivers to have a local residency permit for the city they work in.

The three major cities rolled out draft rules on internet-based ride-hailing businesses on Saturday, two months after the country legalized the industry. Regulators in the three cities said that only those drivers with a local hukou can be in the business and they can use only cars registered in the city in which the drivers are working.

The draft rules are open for comment until late October and early November.

The ride-hailing businesses is a part of the taxi industry so it should follow regulations that forbid taxi drivers from operating outside the city where they are registered, the Shanghai government said on its official WeChat account.

The draft rules upset Didi Chuxing Technology Co., the biggest car-hailing platform in the country. The pending regulation will "raise the entry bar" and control the number of cars on the street "in disguise," Didi said in a public statement. In Shanghai, fewer than 10,000 out of 410,000 drivers providing ride-hailing services are local residents, the company added.

Didi bought Uber Technologies Inc.'s Chinese business in August.

When the central government lifted a cloud of regulatory uncertainty hanging over ride-hailing companies, Liu Xiaoming, vice minister of transport, said the industry should provide a "differentiated" service with better quality and not directly compete with taxi drivers.

However, Didi said the local governments' interpretation of the policy will increase fares and reduce drivers' income.

"What can I do?" said 27-year-old Li Aqiang, who just came to Beijing at the beginning of this year from Henan province. "I might just continue doing business illegally."

State-owned Dazhong Transportation Group Co. Ltd., which provides traditional taxi service in Shanghai, said it welcomes the government's move to rein in the industry.

Contact reporter Chen Na (nachen@caixin.com); editor Ken Howe (kennethhowe@caixin.com)

Share this article
Open WeChat and scan the QR code
GALLERY