Future of transport

Beijing says taxi-hailing app Didi Kuaidi's private car services are 'illegal'

PUBLISHED : Wednesday, 03 June, 2015, 12:01pm
UPDATED : Thursday, 03 September, 2015, 3:58pm

Market leader Didi Kuaidi's private car services have been banned in Beijing in the latest move by Chinese authorities against car-hailing companies.

On Tuesday, the Beijing Municipal Committee of Transportation said that Didi Kuaidi's Zhuanche and Kuaiche services had violated laws preventing private and rental car owners from picking up customers without taxi licenses, according to state news agency Xinhua. Unlike Didi Kuaidi's main taxi-hailing app, both Zhuanche and Kuaiche connect users with private drivers, who may not have a valid taxi license. 

Beijing authorities said that in the last six months, they had discovered more than 200 incidents of the Didi Zhuanche app being used illegally, including 161 incidents of private car owners using the app.

According to a bylaw passed by the State Council and Beijing local taxi regulations, taxi drivers must have a license to charge customers and provide services. Car rental services in Beijing do not provide drivers any qualifications to provide services like a taxi.

Xinhua reported that Beijing authorities will crackdown on illegal rental services, and further regulate the market to maintain the order of public transportation.

Didi Kuaidi said that the company will cooperate with the government to run their business legally and will provide the authorities access to their data on drivers, cars and orders for inspection.

The warning comes one day after Didi Kuaidi launched a new carpooling service pledging to cut Chinese urban traffic and save customers money.

The carpooling service was supported by officials in Beijing's Haidian district as part of its Green Travel initiative aimed at reducing the city's high CO2 emissions.

Car and taxi-hailing apps have seen great success in China in recent years since the launch of Didi Dache in September 2012.

In February, Tencent-backed Didi announced that it would merge with its main rival, Alibaba-backed Kuaidi Dache, giving the combined company a more than 95 per cent market share as it faces competition from American company Uber.

However, the private car services of both Didi Kuaidi and Uber have met resistance from local governments across China and taxi drivers who complain of losing business to unlicensed drivers.

Last week, 37 taxi companies Luoyang city in central China’s Henan province asked all their drivers to uninstall Didi Kuaidi’s apps. Zhengzhou and Chengdu also banned Didi’s private car service.

In early May, Uber offices in Chengdu and Guangzhou were raided by local officials. Uber CEO Travis Kalanick visited China soon after to meet with local authorities, promising to cooperate with them and operate the service under Chinese law.