According to people that have knowledge of the strategy, Chinese regulators are mulling the introduction of new rules that would require ride-booking apps such as Uber and Didi Kuaidi to have commercially registered cars and drivers.
More so, the sources pointed out the city governments would also be allowed to limit the permits issued for this type of service. The proposed regulation could be published for public consultation as early as this month, added the people, with declined to be named because the plan is still private. The proposed rules that would regulate car-hailing services would grant them much needed legitimacy but will also heighten their competition as the current business model is already under pressure because it only uses privately owned cars that are then matched with riders. Meanwhile, the vehicles purposely registered for commercial work are mandated to be changed every eight years and fall under different insurance and tax rules.
And allowing the local authorities to set a fixed number of permits will negatively affect the growth scenarios developed by powerhouses Uber Technologies and Didi Kuaidi – which have pledged rapid expansion in China to investors that have poured billions of dollars. The companies are also confined to a shady zone of the business – even as they have billions of dollars in cash and the desire to rule numerous cities – as they match privately owned cars to a form of paid transportation. The latter type of service has long been the attribute of taxis and limousine and rental companies – all heavily regulated.