China green lights local councils to license car-hailing services

New regulations set to come into affect in November will empower local governments to regulate car-hailing services, clearing a legal pathway for Uber and Didi Chuxing

PUBLISHED : Thursday, 28 July, 2016, 9:24pm
UPDATED : Thursday, 28 July, 2016, 10:45pm

China’s transport authority has liberalised regulations for car-hailing and ride-sharing services, giving local governments the discretion to allow for competition with licensed taxi drivers within their city limits.

Starting November 1st, car-hailing operators including Didi Chuxing and Uber must obtain licenses from local authorities to operate, according to regulations posted on the websites of the Ministry of Transport, the Public Security Bureau and the General Administration of Quality Supervision, Inspection & Quarantine.

The latest regulations released Wednesday contained clauses that were friendlier to car-hailing services compared with an October draft. In the earlier version, car-hailing services had to establish legal subsidiaries in every city in which they wanted to operate, in addition to obtaining business permits from the transport authority.

The new rules are more flexible for drivers working for car-hailing services, said Analysys International’s Beijing-based analyst Zhang Xu.

The new operating rules also established a floor for fares, allowing service providers to charge at cost, compared to previous regulations that barred any deviation from government-set prices.

The new rules also allow vehicles older than eight years to be kept for personal use, after their use-by date as car-hailing services have expired.

The rules provide a legal way forward for the industry, and ensure public safety and fair market competition, China’s Deputy Transport Minister Liu Xiaoming said at a Beijing press briefing.

The October draft stated that all privately owned cars must be registered as taxis before they could be used for online ride-sharing. Drivers need at least three years of driving experience, and must not have violated any serious traffic laws or committed any crimes, according to the new regulations.

“This is a welcome step in a country that has consistently shown itself to be forward-thinking when it comes to business innovation,’’ said Uber China’s Senior Vice President of Corporate Strategy Zhen Liu.

Didi, which said it’s setting aside 100 million yuan to integrate online ride-hailing and taxi services through a strategic partnership of regulators, taxi companies and drivers, said the rules are a “positive first step”.

“The relevant policies will continue to improve and adapt in practise, thereby supporting the growth of a burgeoning ride-share market and the upgrading and restructuring of traditional taxi sectors,” the company said in a press statement.