Business | China takes the front seat in regulating ride-hailing
A taxi driver is reflected in a side mirror as he uses the Didi Chuxing car-hailing application in Beijing, China. Photo: Reuters/Jason Lee
A taxi driver is reflected in a side mirror as he uses the Didi Chuxing car-hailing application in Beijing, China. Photo: Reuters/Jason Lee

China takes the front seat in regulating ride-hailing

New central government regulations come into effect on November 1, but major cities are still likely to introduce more stringent rules

October 31, 2016 4:38 PM (UTC+8)

China becomes the first country to introduce national regulations covering the ride-hailing industry on November 1.

The new measures, approved in August, require drivers to have at least three years of driving experience and no criminal convictions for dangerous or drunk driving, as well as for drug taking and violence. The drivers must also be licensed by a local taxi authority.

The regulations issued by the Transportation Ministry set China apart from many other countries where ride-hailing operations such as Uber have been banned or are embroiled in lawsuits.

However, the new legislation is unlikely to persuade major cities to stop rolling out more rigorous regulations on local ride-hailing markets.

Beijing and Shanghai announced separate rules on October 8 which allow only drivers with local residency permits and vehicles with local licenses to enter the market. Shenzhen, Guangzhou and some other second tier cities have followed suit since then.

Didi Chuxing, China’s ride-hailing champion, which successfully saw off opposition from Uber to dominate the market, has openly opposed the municipal draft regulations.

The requirements for a local license are impossible to change, as is the local residency or residential permit

“They will hit several hundred millions of customers and tens of millions of drivers,” it said, adding that only 10,000 of 410,000 drivers in Shanghai would be qualified to run the business.

The People’s Daily overseas version published an opinion piece on October 9 also questioning the municipalities’ draft regulations which would exclude migrant workers from running a ride-hailing business.

However, the general view in the industry is that the municipal rules will prevail.

“The requirements for a local license are impossible to change, as is the local residency or residential permit,” said Lu Zhenwang, an independent e-commence analyst in a report by Xinhua News Agency. However, a relaxation of the rules on vehicle size and license insurance may be possible, he added.

According to a 2015 report, Chinese ride-hailing services have the potential to cater for 90 million passengers a day, in a total transportation market of 2.8 billion passengers.

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