New Online Car-Hailing Rules Disqualify Nonlocal Drivers or Vehicles in Major Chinese Cities
Yicai Global
/SOURCE : Yicai
New Online Car-Hailing Rules Disqualify Nonlocal Drivers or Vehicles in Major Chinese Cities

(Yicai Global) Oct. 10 -- Major Chinese cities rolled out new rules on online ride-hailing at the end of the week-long National Day holiday, imposing stricter preconditions, which require both drivers and their vehicles to be locally domiciled in such megacities as Beijing, Shanghai and Tianjin.

In addition, drivers must hold a local residence permit in Shenzhen and other cities, although no household registration (registered domicile) requirement applies. The household registration system is still strict in many Chinese big cities. Those wanting to transfer their household registration into such cities face strict limits, while those merely wanting a residence permit confront fewer, but still daunting barriers. Also, bad traffic and air pollution have induced many cities to strictly limit annual new-vehicle registrations.

Since taxi driving is relatively hard work for fairly low pay, the number of non-local registered drivers has seen a rapid increase in recent years. Insiders believe implementation of the above regulations will most affect Didi Chuxing -- the largest Chinese online car-hailing operator, followed by Uber. Didi Chuxing and Uber countered that they would provide "high-quality service to differentiate themselves from other competitors," meaning they will set up more barriers for incoming vehicles and drivers. This will allow only middle-and-high-end vehicles -- which cost much more than common taxies -- access to the online car-hailing business. A series of problems -- a sharp decline in vehicle supply, large fare increases and low travel efficiency -- will follow.

However, Mr. Xu Kangming, a taxi reform expert with the transport ministry, said the new policy would not cause online ride-hailing service costs to soar, and would hold cruising taxi fares relatively low. A survey by CNIT-Research found that Didi Chuxing has a share of about 85 percent of the online car-hailing market, followed by Uber (7.8 percent), YiDao Yongche (3.3 percent) and CAR Inc. (2.9 percent).

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