Cities across China should move towards legalising car-hailing services

PUBLISHED : Tuesday, 27 October, 2015, 1:33am
UPDATED : Tuesday, 27 October, 2015, 1:42am

Transport officials on the mainland have thankfully begun the process of shaking up the staid taxi industry. Public opinion is being sought on draft rules that would regulate app-based services being provided by Didi Kuaidi, Uber and others that are luring passengers away from traditional companies. Although the newcomers are popular and through technology help ease air pollution and congestion, their unlicensed operations fail to properly protect customers. Recognition of the need to embrace rather than fight the innovators can only be lauded.

Shanghai's transport authority has the right idea, having granted Didi the nation's first municipal licence to operate a car-hailing service. Uber has also moved a step closer to that goal, setting up a company in the city's pilot free-trade zone to manage its mainland operations and being given a licence for an internet firm. Such steps are an about-face on the approach of some cities, which had sided with taxi companies in rejecting the competition by imposing bans and making apps unlawful. Legalising, rather than outlawing, is the sensible direction.

The draft regulations, if approved, would require the new services to meet the same rules as existing taxi firms. They would be expected to register as taxi operators, insure vehicles and passengers, sign drivers to labour contracts and share data with local transport authorities. This would put the new and old firms on an equal footing and ensure that passengers and other road users are protected, no matter which is turned to. Importantly, it would also lift standards for customers, forcing competition in an industry that has been slow to adapt.

Getting taxis during rush hours and inclement weather can be difficult; Didi, Uber and the like have changed that with apps that can bring cars within minutes. Vehicles tend to be more comfortable and the fares more certain, while Didi's sharing service reduces costs. Both firms have billion-dollar expansion plans, aiming to move into every major city. It is precisely the overhaul that is needed and city officials have to nurture it.