China publishes draft rules to regulate online car hailing services

A taxi is reflected in a window at the office of taxi-hailing service Uber Inc in Hong Kong, China.
A taxi is reflected in a window at the office of taxi-hailing service Uber Inc in Hong Kong, China.PHOTO: REUTERS

SHANGHAI (REUTERS) - China on Saturday (Oct 10) published draft rules to regulate online car hailing businesses, a booming sector where United States firm Uber Technologies and Chinese rival Didi Kuaidi have been aggressively competing for market share.

The draft rules, published on the website of the Ministry of Transport, said they are aimed at maintaining order by strengthening supervision of online car hailing apps.

Like in many other countries, the legality of car hailing services has vexed regulators in China where the authorities say drivers are operating outside the law.

The draft rules, which will be open to public feedback, will require ride-sharing companies to obtain a licence and guarantee a transparent pricing mechanism.

Drivers will also have to meet certain qualifications such as driving experience, and those without a licence will not be allowed to provide services. The number of seats will be limited to no more than seven in each car.

Uber and Didi Kuaidi are locked in a turf war in China, investing billions of dollars to lure in riders with steep discounts and to subsidise the money earned by drivers.

Uber China said in a statement on Thursday it was preparing documents to apply for a licence.

Didi Kuaidi, a US$16 billion (S$22 billion) firm backed by Chinese Internet giants Alibaba Group Holding and Tencent Holdings also said on Thursday it had received a car booking licence for its operations in Shanghai and that it was seeking more licences from other cities.

Didi Kuaidi is the dominant ride-hailing app in China, although Uber recently closed a US$1.2 billion deal to enter 100 more Chinese cities in the next 12 months.