China's 'Two Sessions' 2016

China to give green light to ride-hailing firms Uber, Didi Kuaidi

Transport chief promises the regulations will be fair to providers as well as the taxi industry

PUBLISHED : Monday, 14 March, 2016, 2:45pm
UPDATED : Tuesday, 15 March, 2016, 2:17am

The mainland is drawing up rules to regulate the fast-growing ride-hailing market, the transport minister said on Monday.

But it remains unclear when the regulations would go into ­effect, with Yang Chuantang ­cautioning that the interests of all stakeholders including taxi companies needed to be weighed.

“As a new invention, online ride-hailing services have been a good experience for consumers, and welcomed by some passengers. So our solution is to provide a legal way” forward for the industry, Yang said on the sidelines of the annual National People’s Congress in Beijing.

READ MORE: The latest Chinese craze: test driving a new Mercedes-Benz, Audi or Lincoln via Didi Kuaidi, the nation’s top car-hailing app

Despite booming demand, providers have faced intense objections from taxi companies and crackdowns by local governments in parts of the mainland. Their legitimacy has remained a grey area even for market leaders such as Uber and its local rival ­Didi Chuxing.

Yang said the ministry was considering a draft set of regulations covering both taxi and private car-hire services. The rules would reflect public opinion received last year, he said, adding the ministry hoped to release them as soon as possible although he did not give a time frame.

READ MORE: Social media on wheels: China’s Didi Kuaidi ‘no longer a taxi app’, offers networking service as daily rides hit 7 million

He admitted accommodating the interests of stakeholders had been difficult. “These interest groups have very complicated and diverse demands and carrying out further reform will require adjustments in their interests,” Yang said.

Yang also avoided the question of whether online ride-hailing services were illegal on the mainland. “Different local governments should supervise the ­industry according to the actual situation in their areas based on the present transport policies.”

He said heavy spending by the app providers was aimed at gaining market share “within the short term” and were competitively unfair for the taxi industry. “It is unhealthy and cannot be sustained in the long term,” he said.

Both Didi and Uber told the South China Morning Post that they were encouraged by Yang’s remarks Uber said its spending tactics were in line with industry practice and necessary to attract new users. Players would become competitive as the market matured, it said.

Uber’s chief executive, Travis Kalanick, said earlier this year that the company burned through more than US$1 billion a year in China.

READ MORE: Didi Kuaidi grabs China’s first internet car-booking licence from Shanghai while rival Uber sets up local company in city’s FTZ

Didi contends it spends less than its rivals to ensure the service remains attractive to customers and a viable career for its 10 million drivers. The company was breaking even in more than half of the 400 cities it covered, according to Didi. Uber is running in about 50 cities and hoped to double that number.

According to the draft rules, online ride-hailing firms will be required to be licensed, have their prices guided by the government or decided by market forces, and set up their servers on the mainland.

Foreign-invested operators would have to comply with national security laws and obtain telecommunications licences if they offered value-added telecoms services.

Yang said the providers would help reform the taxi industry, which has been criticised by the public as monopolistic.

Most taxi companies are in the hands of a few government-sanctioned operators. Drivers must pay hefty fees to the operators for a licence.