China Clears Road for Uber to Operate Legally
July 28 2016 - 12:40PM
Dow Jones News
Beijing has given the green light for Uber Technologies Inc. and
its Chinese ride-hailing rival to operate legally in the
country.
China on Thursday issued nationwide ride-hailing regulations,
making it the largest country to formally legalize the sector at a
national level. Uber continues to clash with regulators around the
world, and it pulled out of Budapest this month citing onerous
government restrictions.
The Chinese ride-hailing regulations are greatly eased from a
draft version from last fall, with the likes of Uber and its rival
Didi Chuxing Technology Co. allowed to operate as long as they
apply for and receive licenses for their companies and drivers.
The rules, to be adopted in November, do forbid operations below
cost, ruling out a return to fierce subsidy battles like last
year's between Uber and Didi. Both companies have spent huge sums
to win drivers and riders to their services in China, while
attracting billions in investment. Apple Inc. said in May it would
invest $1 billion in Didi.
The previous draft of the regulations would have forced Uber and
Didi to operate like traditional taxi companies, subject to
government-set fares, car quotas and other heavy restrictions.
These requirements have been struck from the final version,
although local governments are allowed to set minimum and maximum
fare prices.
China Vice Minister of Transport Liu Xiaoming said at a press
conference Thursday that regulators decided to allow ride-hailing
companies to operate more freely after input from industry
stakeholders.
"This was partly in respect of the public's opinion," he
said.
The rules come as a victory for Didi and Uber, which both
mounted intensive closed-door lobbying campaigns over the past year
with regulators, according to people familiar with the companies.
But in contrast to Uber's outspoken conflict with western
regulators, both praised Chinese regulators publicly throughout the
process.
Didi and Uber both said Thursday they welcomed the regulations
and were prepared for implementation.
At stake is the world's largest market of urban commuters, which
has huge growth potential. At 750 million people by some estimates,
the market is more than twice the total U.S. population and
includes 25 cities more populous than Los Angeles.
Under the new rules vehicles must be retired from ride-hailing
use after eight years but can still be retained by their owners for
personal use. Ride-hailing vehicles that reach 600,000 kilometers
are no longer allowed on the road for any purpose.
This is more friendly to private car owners than the draft
regulation, which would have banned ride-hailing vehicles from the
road after eight years regardless of mileage.
Ride-hailing drivers must have at least three years' driving
experience and cannot have a record of drunken driving, violent
crimes or drug charges.
The initial draft would have restricted drivers to working for
only one ride-hailing provider, but this restriction was removed in
the new version. Private carpooling with multiple passengers was
also exempt from the rules.
Write to Eva Dou at eva.dou@wsj.com
(END) Dow Jones Newswires
July 28, 2016 12:25 ET (16:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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