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The Next Big Thing

China cracks down on domestic taxi apps next after Uber raids

PUBLISHED : Wednesday, 13 May, 2015, 2:52pm
UPDATED : Monday, 17 August, 2015, 10:16am

Chinese authorities have widened a crackdown on car-hailing services with raids on a local office of two homegrown firms, just days after similar actions against two offices of US firm Uber.

Local authorities in Luoyang, Henan province, shut down the offices of Didi Dache and Kuaidi Dache on Monday, mainland business magazine Caijing reported.

The move came was sparked by an altercation between taxi drivers that threatened to get out of hand, the report said, citing a WeChat network used by local drivers.

The action is the first against homegrown car apps companies after two local governments, Guangzhou and Chengdu, raided offices of Uber in the past two weeks.

Mindful of social unrest, China had banned car-hailing apps being used by drivers with no taxi licences in an attempt to regulate the sector and fend off protests from taxi drivers.

Since then, the status of car-hailing companies has been uncertain. They have continued to operate and have become very popular, functioning almost as much as social networking platforms as solutions to transport problems.  

But opposition has also been fierce, with taxi drivers going on strike in multiple Chinese cities in January to protest the loss of business to the car services.

In February, Didi and Kuaidi, backed by internet rivals Tencent and Alibaba respectively, announced they would merge, a move that was seen as a response to the success of Uber in China. The two local firms have a combined value of about US$6 billion.

A spokesman for the combined company said it was business as usual in Luoyang, but did not elaborate further.

The Luoyang raids were triggered by taxi driver operating in the suburbs who used the car apps to get clients, Caijing reported. Local authorities had requested all taxis uninstall the Didi Dache and Kuaidi Dache apps and when other taxi drivers discovered the violation, they found the driver and blocked him in his car.

Then they drove to the office shared by Didi Dache and Kuaidi Dache to demand the apps be removed, but the staff declined to do so, the report said.

More taxi drivers arrived and police came to maintain order before officials of the industry and commerce department shut down the office. 

On Weibo, China’s largest real-time social media platform, one post read: "Official crackdowns can't beat the fact that technology and apps will change people's lives. Because the public need car hire apps".