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China said to require hailing apps to register business vehicles

Monday, September 21, 2015 - 14:09

[BEIJING] China is considering regulations that would force ride-booking apps such as Uber and Didi Kuaidi to use commercially registered cars and drivers, and would allow city governments to limit permits for those services, according to people familiar with the plan.

The proposed rules may be released as early as this month for public consultation, said the people, who asked not to be identified because the proceedings are private.

The transportation ministry didn't immediately respond to a phone call and faxed request for comment. Huang Xue, a Beijing-based spokesman for Uber, said the company doesn't comment on speculation. Li Min, a Didi spokesman, said he's unable to comment because the company hasn't seen any official materials on the regulations from the ministry.

The proposed framework for governing car-hailing services, while giving them legitimacy, will also challenge their current business model of signing up owners of privately owned cars and matching them with riders. Vehicles that are registered for commercial use have to be scrapped after eight years and carry higher insurance and tax rates.

The power of local authorities to limit the number of permits for vehicles driving for car-hailing apps may also cap the growth of Uber Technologies Inc. and Didi Kuaidi, both of which have raised billions of dollars from investors by pitching rapid expansion in China.

Despite being loaded with cash and armed with plans to expand into dozens of cities, the companies continue to operate in an ill-defined area when it comes to enabling privately owned cars to provide paid transportation. That service traditionally has been confined to licensed taxis and rental companies.

The requirements for commercial registration and higher fares were earlier reported the Economic Information Daily, a newspaper managed by the official Xinhua News Agency. The China Business Journal reported Monday that the number of on-demand vehicles will be left to local authorities to decide.

Both Uber and Didi have repeatedly pledged to operate in accordance with regulations while lobbying the government to update rules to reflect commuter habits that have changed with the sharing economy.

Didi Kuaidi President Jean Liu said this month the problems of commuting in Chinese cities have created a "common language" between the company and government officials, who understand that congestion reduces the efficiency and competitiveness of a city.

Uber Chief Executive Officer Travis Kalanick made clear the company wants to be good partners in China by creating jobs and cooperating with the government. He called Uber "co-architects in making cities of the future" during a speech in Beijing earlier this month.

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