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Ride-hailing apps solidify their legal status in China

How will China’s ride-hailing rules affect the market?

China’s Ministry of Transportation and six other government ministries on Thursday jointly published the “preliminary rules on the management of online car-booking,” legalizing ride-hailing services in China for the first time.

Last October, a draft of the regulations was released, but received many dissenting opinions. By September 2015, Didi Chuxing already had seven million registered drivers and its competitor Uber had 660,000 registered cars – reflecting a huge market for ride-hailing. Additionally, ride-hailing platforms, in Didi’s words, are not only economical for ride-hailers but also environmentally friendly.

Nearly a year passed, and the regulations feature five major points:

1. Ride-hailing is now officially legalized. The government said that it supports ride-hailing platforms to continue making innovations, and local governments must take the responsibility of managing their own taxi-related businesses.

2. Private cars may run as ride-hailing cars when they meet the following standards: it has no more than seven seats; it supports route-tracking, positioning and emergency warnings; it is registered at the public security bureau as an orderable taxi, and is licensed at the local taxi administration department.

3. A ride-hailing vehicle may run until it reaches a total mileage of 600,000 km (372,823 miles). The arbitrary eight-year service limit for taxi vehicles is not applied to ride-hailing vehicles. This is to the benefit of part-time drivers.

4. Drivers must not be approved for the ride-hailing business if their personal history involves crimes, dangerous driving, drunk driving, drugs, and violence.

5. Traditional taxi companies are encouraged to transform to offer ride-hailing services.

Didi Chuxing made a statement that they welcome the new rules and are ready to meet the requirements. How about its competitor Uber?

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