Uber, Didi get green light to do battle
China will allow services from November even though both firms have operated there for years
After pouring billions into the battle for ride-hailing supremacy in China, Uber Technologies Inc and Didi Chuxing finally have a legal greenlight in the world’s biggest market.
China plans to formally allow the services from November — even though both companies have operated in the country for years. The decision brings clarity to an industry locked in disputes with regulators and in courts across the globe.
The new regulations govern their operations and define the scope of competition, outlawing the ploy of charging less than the cost of a trip to win market share. But they turned out to be less onerous than some had feared and dispels the cloud of uncertainty hanging over companies such as Uber and Didi that till now lived in a murky grey area.
The laws, released yesterday by the transport ministry, free the world’s largest on-demand ride providers to compete for drivers and riders in a crucial market. Shares in Car Inc, an auto-rental company that also provides car-hailing in China, rose in Hong Kong after the news, first reported by Bloomberg News, emerged.
“It’s really positive for both Uber and Didi’s business in China,” said Cao Yang, an analyst at Shanghai-based IResearch. “Things to look for going forward are how the rules will be implemented and more detailed regulations on pricing and ownership.”
Uber and Didi already cover hundreds of cities and transport millions of people daily, but their battle is set to intensify. Uber Chief Executive Officer Travis Kalanick has called China his most important market, one he personally supervises. Both are raising cash at a frenetic pace and spending billions of dollars to bankroll their expansion, a margin-eroding war that some investors are said to oppose.
The government will now encourage private auto-sharing — including carpooling — in the interests of further developing what it called a sharing economy, Vice Minister Liu Xiaoming told reporters in Beijing. China may benefit in other ways: Uber and Didi argue their services help relieve traffic congestion and air pollution by taking cars off roads. The government is exploring ways to better the environment, an increasingly sore point with the populace following decades of growth founded on heavy industry.