New regulations could limit Didi’s taxi on-demand service in China’s leading cities

There’s problems in China for ride-sharing services soon after authorities in Beijing and Shanghai agreed to institute new regulations that could significantly reduce the driver pool for solutions like Didi Chuxing and Uber.

According to rules proposed in October that have now been adopted by each cities’ regulators, taxi on-demand services can only use drivers who are registered to live in either city. The regulations are not effective immediately, but they could deal a significant blow to Didi and Uber simply because appropriate now it is estimated that a considerable percentage of their fleet of cars are not registered in either city. The exact numbers are not known but the The New York Times reported that, for example, less than ten,000 of Didi’s 410,000 active drivers in Shanghai have permanent residency papers.

The system is identified as ‘hukou’ and it was instituted to prevent floods of folks coming to huge cities from rural locations. Despite that, numerous men and women who reside in Beijing and Shanghai do so without having papers. Since numerous of these unofficial citizens constitute the workforce behind on-demand services and taxi apps, the regulations could create a worrying predicament for Didi and other people.

Didi, which is in the process of completing the acquisition of Uber China, didn’t directly comment on the local rule when we asked. As an alternative, its response focused on other components of the ride-sharing regulations, which were amended with less aggressive terms this summer and now no longer consist of restrictions over the price and quality of automobiles.

“These rules are a considerable improvement towards a a lot more sensible and liberal framework. For instance, Beijing will introduce a 5-month-long transition period. Shanghai lowers the wheelbase requirement from 270 CM to 260 CM [enabling cheaper vehicles amongst ride-sharing fleets], while scrapping the initial proposal for emission floors. There will be adequate time for adaptation, and far more economy and environmental-friendly cars enter the service,” a Didi representative told TechCrunch.

The regulations have been amended multi times because their initial inception final year and, with Didi doubtless lobbying difficult and utilizing the contacts amongst its investor base, it remains to be seen if the nearby driver rules will come into force as they presently stand right now. Whilst, on the plus side, several of China’s smaller cities are adopting the suggestions much less aggressively than Beijing and Shanghai.

TechCrunch