Lifting a cloud of regulatory uncertainty hanging over the future of Uber and its competitors in China, the government on Thursday legalized ride-sharing services but announced new licensing requirements and other rules.
The new regulations, to take effect Nov. 1, require drivers to have at least three years of driving experience and no violent criminal or drunk-driving history. The ride-sharing companies and driver vehicles must be registered with authorities.
Uber called the new rules a “historic starting point” and hailed China for becoming the first major economy to adopt comprehensive nationwide rules on ride-sharing. The Transportation Ministry in conjunction with six other government ministries issued the rules.
“We welcome the new regulations, which send a clear message of support for ride-sharing and the benefits that it offers riders, drivers and cities,” said Zhen Liu, senior vice president of corporate strategy for Uber China.
Uber, which has a strategic partnership with giant Chinese internet firm Baidu, said it is already operating in more than 60 Chinese cities and aims to raise that to 100 by the year’s end.
Whether the new rules will do anything to alleviate the competitive challenges facing San Francisco-based Uber in China is unclear. This year, Uber Chief Executive Travis Kalanick famously said the company was losing $1 billion a year trying to establish itself in the Chinese market.
Its biggest competitor is Didi Chuxing, which recently received a $1 billion investment from Apple. Didi Chuxing praised the decision to allow ride-share platforms to set their own pricing.
As in many countries, the rise of ride-sharing services has bred confrontations with taxi drivers in China. Cabbies have complained that the unregulated services – which have offered huge initial subsidies to drivers and riders in a bid to grab market share – are undercutting their business and operating without sufficient oversight.
The new rules empower local taxi administration authorities to manage the ride-share licensing platforms. In a statement, Didi noted that local governments are given “a certain discretion” to determine operating requirements. “We call for local authorities to adopt market-driven approaches that encourage innovation and new business models,” the company said.
The new rules add pressure on companies like Didi to harmonize their businesses with taxi operators.
Didi promised it would invest millions of dollars to “accelerate the integration of the online ride-hailing and taxi services through strategic partnerships with regulators, taxi companies and drivers.”
“Our shared goals are to facilitate the integration of the taxi and ride-booking industries, to help raise operating efficiency and driver income, and to provide better transportation services for Chinese passengers,” Didi said.
Among the rules outlined Thursday, vehicles can seat no more than seven passengers and must be equipped with GPS systems.
Vehicles must be registered and have no more than 372,000 miles on their odometers, or be less than eight years old, whichever comes first.
The status of part-time drivers apparently is a question mark under the new regulations. Didi said it hopes that “local practices will allow for separate treatment of part-time drivers to foster … reform in the transportation industry.”