3 cities in China plan tighter rules for online ride-sharing services, in blow to company that agreed to acquire Uber

Draft rules issued by Beijing, Shanghai and Shenzhen will limit the number of drivers able to apply for permits to work for private car-hailing services.
Draft rules issued by Beijing, Shanghai and Shenzhen will limit the number of drivers able to apply for permits to work for private car-hailing services.PHOTO: AFP

BEIJING (Bloomberg) - Three of China's largest cities plan to limit the pool of drivers for online ride-sharing services, dealing a blow to Didi Chuxing, the firm that agreed to acquire the Chinese business of Uber Technologies Inc.

Draft rules issued by Beijing, Shanghai and Shenzhen on Saturday (Oct 8) said that only holders of local residency permits - called hukou - would be able to apply for permits to be drivers for private car-hailing services.

Less than 3 per cent of 410,000 drivers on Didi's platform in Shanghai have local hukou, the company said on Saturday. Plans for tighter vehicle standards - including specifying a minimum wheelbase width - would rule out more than 80 per cent of the service's cars in the city, Didi said.

"These proposals would likely mean a sharp drop in market supply of ride-sharing vehicles, a significant decrease in the number of drivers and a steep rise in costs," Didi said in a statement. "We call for the local authorities to create a more enabling and friendly environment for new technology developments in the sharing economy."

The cities asked for feedback on the planned rules in coming weeks.

In July, the central government gave a legal green light for online car-hailing services. In August, Didi agreed to acquire Uber's business to form the largest platform in the country.