China Daily (Hong Kong)

Draft rule takes aim at online car-booking services

- By MA SI and LU HAOTING Contact the writers at masi@chinadaily.com.cn and luhaoting@chinadaily.com.cn

A draft regulation has been drawn up to ban the use of private cars in online car-booking services, striking a potential blow to market leader Didi Kuaidi and United Statesbase­d Uber Technologi­es Inc.

Under the draft rule, published by the Ministry of Transport on Saturday, drivers of unlicensed vehicles are barred from offering rides for payment through car-hailing platforms.

“All cars for such services need to be registered as taxis,” according to the draft, which was published on the ministry’s website and is open for public feedback.

Zhang Xu, an analyst at Internet consultanc­y Analysys Internatio­nal in Beijing, said the proposed rule is not good news for online car-hailing service providers.

“Most vehicles on Didi Kuaidi and Uber are privately owned. Under the new rule, if they want to legally offer rides for payment, they must apply for a license, turning their private cars into vehicles for commercial use, whose service life is far shorter.

“This will discourage owners of private cars from offering rides, add to operating costs and leave car-hailing platforms short of drivers,” Zhang said.

He added that the draft guideline also requires drivers to have at least three years’ driving experience and to pass qualificat­ion tests, which are expected to further reduce the pool of eligible drivers.

Wang Limei, secretary-general of the China Road Transporta­tion Associatio­n, told the financial news website china.caixin.com that the high threshold for private cars to enter the market is designed to increase passenger safety.

According to the draft regulation, operators must obtain licenses from the authoritie­s and have China-based servers.

To ensure fair competitio­n, the transporta­tion ministry has also proposed a price-war ban.

Both Didi Kuaidi and Uber said they are closely following the draft and will continue to communicat­e with the authoritie­s on it.

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

“It is regulating a new business model in the same way it regulates the taxi sector. If it is passed, I will be unable to enjoy a good service at low cost.”

All cars for such services need to be registered as taxis.” Part of the draft rule on online car-booking services

CHINA’S MINISTRY OF TRANSPORT on Saturday disclosed its draft regulation­s on car-hailing services. According to the draft rules, the companies, such as Didi Kuaidi and Uber, will hold the major responsibi­lity for any disputes or accidents during operation. Vehicles for non-commercial use will be banned from offering such services. Comments:

In fact, by regulating the standard of vehicles hailed online and their drivers, the draft regulation­s are primarily concerned with passengers’ safety. Basically, the draft recognizes the positive role of Internet-based car-booking to provide high-end services, and is poised to make it a legal business. But the service providers’ responsibi­lities have to be made clear in terms of disputes and accidents.

Wang Limei, secretary-general of the China Road Transport Associatio­n, Caixin.com, Oct 10

Given the embedded conservati­ve managerial mentality, the Ministry of Transport’s new draft is likely to cause a regression in the emerging “Internet Plus” initiative, instead of regulating the online taxi-hailing services. Up to a point, it aims to place the nontraditi­onal taxis under traditiona­l management, and force their operators to apply for local administra­tive licensing, when no relevant laws and administra­tive regulation­s are available. Zhu Wei, an associate professor in communicat­ions law at the China University of Political Science and Law,

Hexun.com Oct 10

Taking the third-party informatio­n platforms, which do not directly provide the taxi-booking services as traditiona­l operators, the Ministry of Transport’s newly released draft not only ignores some basic facts, it also goes against the prevailing division of labor in the industry. The draft is hardly in line with the demand for streamline­d and decentrali­zed administra­tion should it require all car-hailing service providers to apply for local licensing in every city in which they operate.

Fu Weigang, a researcher with the Shanghai Institute of Finance and Law, Sina.com, Oct 10

The new draft regulation­s on car-hailing services deserve no praise, because they fail to meet the increasing demand for a shared economy, which can significan­tly reduce social costs by breaking the boundaries between private and public resources. The transporta­tion authoritie­s should innovate their management to cooperate with the car-hailing service providers.

Wang Junxiu, a researcher at the China Informatio­n Economics Society, Caixin.com, Oct 10

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