Draft rule takes aim at online car-booking services

If enforced, the regulations may provide clarity for companies, which have run into a multitude of legal headaches, but it could also force them to retool their business models and operate more like traditional taxi fleets.

China’s Ministry of Transportation proposed a new set of rules regarding ride-sharing and taxi services, aimed at balancing the Uber/Didi Kuaidi vs traditional taxi drivers struggle.

This strategy will potentially deliver a serious setback to popular service providers such as Didi Kuaidi or USA competitor Uber which have invested heavily in a bid to expand their business in the world’s most populous nation.

China’s ministry of transportation has proposed new guidelines that would significantly increase the amount of power the government holds over ridesharing apps like Didi Kuaidi and Uber. The lean startups would have to act much more like taxi companies, with the government regulating pricing and enforcing stricter oversight.

Liu Chang, a 25-year-old engineer in Beijing who regularly uses online car-hailing services, said, “The draft guideline is unreasonable”.

A few of the rules that were outlined include requiring such services to share their data with local transport officials, signing up their drivers on labor contracts, insuring both the cars and the passengers and registering their cars as taxi services. The company is hoping to get more licenses from other cities.

To call China an important market for Uber would be like calling water important for the creation of life. Dubbed Shanghai Wubo Information Technology, the company has successfully earned the needed licenses and qualifications as an Internet company.

The draft regulations are now available for one month of public comment, with rules expected to be finalized by the end of the year. There’s no information however on when the final version would be published and when it would take effect.

Car-hire firms such as Didi-Kuaidi, Uber, vehicle and Yidao Yongche have said they will cooperate with the authorities over the new rules and apply for the licenses.