China green lights ride-hailing services with new regulations

Uber called China’s announcement of new regulations a needed welcome step, while its rival Didi Chuxing, acknowledged widely as the leader in China for ride-hailing, called the regulations a positive first step. Taxi drivers in several cities also have protested over competition from such services. Previously, Uber and Didi operated in a legal gray area by allowing some of their drivers to use their privately owned cars though some local authorities, such as those in Shanghai, have granted one or both companies permission to operate private cars.

Didi has already set aside $15 million to be used as a development fund as a way to speed up the company’s integration with China’s regulators, drivers and taxi firms, but has voiced concern at the proposed process of licensing.

Didi also welcomed the rules, saying they reflected an open mind on the part of the government with regard to car-hailing and the sharing economy.

China’s latest decision allows an American internet company to potentially permeate Chinese society and culture; something the government rarely authorizes.

Didi, which claims nearly 90 percent of the China ride-hailing market, said last month that it had recently raised US$7.3 billion (S$9.87 billion) – US$1 billion of which came from Apple – in one of the world’s largest private equity financing rounds.

The move marks the legalization of on-demand private vehicle taxi services.

U.S. giant Uber, which says it operates in more than 60 Chinese cities, also welcomed the regulations. “Uber China is regulation-ready, and we look forward to working with policy makers around the country to put these regulations into practice”, Uber said in a statement. Didi raised $7.3 billion in its latest round of funding in June and Uber received almost $2 billion from Chinese backers in January. In May, Apple announced a $1 billion investment in the Chinese taxi start-up.

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