The Chinese Ministry of Transport this afternoon released a new set of regulations for the ride-hailing business. The new regulations will be open to public submissions for the next month.
The new regulations feature several key points:
- Online car-booking services should compliment existing public transport and will apply guided price adjustments in accordance with the market.
- Ride-hailing service providers must attain operation permits for taxis and must register as Internet services with the Telecommunications Department. Providers should also have their servers residing in Mainland China with their customer databases connected to the local transportation department’s monitoring platform.
- Ride-hailing business cars mustn’t be of more than seven seats and must be registered as commercial devices equipped with GPS devices and alarms. Local governments have the right to set the minimum criteria for permitted vehicles.
- Drivers must pass specific examinations before being allowed to operate.
- Business operations must be fair and just, with no monopolies and interference of fair market practices, including by pricing below cost to attract customers. Business operators must purchase insurance for passengers. Car-pooling for private cars will not be allowed.
- Cross-department monitoring will be established to enhance management of the industry. Industry associations will be encouraged to establish blacklists for operators and drivers who misbehave.
- Vehicles will not be permitted to register with multiple platforms simultaneously.
Ride-hailing businesses in China which include industry heavyweights, Uber and Didi Kuaidi, will have to meet new criteria to continue operating their online car-booking services.
Uber officially announced last Thursday that it has registered Uber China as an independent Chinese company. UCAR, another ride-hailing business provider in China, is also reported to be in negotiations with government departments to obtain an official license.
Didi Kuaidi, the biggest player in the field, is a step ahead. Last Thursday, The Shanghai Municipal Transport Committee issued its first municipal Internet ride-hailing business certificate to Didi Chuxing, Didi Kuaidi’s ride-hailing app.
According to the regulations established by the Shanghai government: business operators are responsible for evaluating driver suitability, vehicles will not have to register as commercial vehicles and the price of online services must be set higher than ordinary taxi service.
Sun Jianping, head of Shanghai’s Municipal Transport Commission, said Shanghai would update local regulations to comply with the new regulations released by the Ministry of Transport.
Ride-hailing service providers will also have to adjust their existing products to comply with the new regulations. Particularly troublesome will be the new prohibition on private cars being used for carpooling.
Uber just launched its carpooling product, Uber Commute, while Didi already has a similar product, Didi Shunfeng (which means Didi Lift) and is fast developing its private bus service.
This doesn’t mean car-pooling per se will be banned in China. One of the eight Ministry responses to questions concerning the ride-hailing business today reads, “We the Ministry, encourage car sharing and carpooling for non-profit use.” But it also emphasizes the new pivotal role for government monitoring in the business.
As the dominant market leader, Didi Kuaidi claims to serve 80% of the Chinese private car-hailing market. The Ministry of Transport intends to tighten the inspection of their service.
“We encourage the orderly development of ride-hailing software, while attending to the need to ensure a minimum standard of service. In order to protect users who don’t wish to use ride-hailing apps, we also encourage the provision of car-hailing services via traditional methods like telephone calls, to ensure equality of access for all users,” the Ministry said.