China legalizes Uber and Didi with new rules. But there are lots of catches.

Image uses photo from Pixabay.

China today made public the final draft of a new law that will legalize ride-hailing apps from the likes of Uber and Didi Chuxing. The new rules take effect on November 1.

Although the regulations are not as scary as they appeared in the first draft back in October, they still present some challenges to Uber and Didi. Drivers must now have a minimum of three years of on-road experience, which will force out some part-time and full-time drivers who had only just got their driving licenses.

Tech in Asia has contacted both Uber and Didi to ask how many drivers they will lose. (Updated 90 minutes after publishing: No figures from either. Uber claims “this does not and will not impact our business as the majority of driver partners on the Uber platform already have a long driving history.” Didi states: “Specification of the rules at local level takes time and we will work with authorities to ensure smooth transition. We expect this to be a staged process.”)

Plus, the web companies must now store all user and ride data online within mainland Chinese servers for a period of two years. A source who wishes to remain anonymous tells Tech in Asia that Uber recently made this move for its China business.

Easy rider

Aside from getting the green light from authorities in Beijing, many other parts of the new law give the transport apps more leeway.

An Uber pick-up station outside a mall in Chengdu, China. Photo credit: Uber.

Uber and Didi this afternoon hailed the law as a positive step forward for the burgeoning industry.

Uber and Didi are now free to set their own prices.

“We welcome the new regulations, which send a clear message of support for ride-sharing and the benefits that it offers riders, drivers, and cities,” said Zhen Liu, SVP of corporate strategy at Uber China, the Shanghai-based subsidiary of the American tech giant.

“We believe the rules will usher in a new stage of growth for China’s online ride-booking ecosystem and that Didi is prepared to meet these new requirements,” said a statement from the Chinese startup that’s battling Uber on home ground.

China’s new law frees up Uber and Didi to set their own prices, unhindered from government intervention. Also, it extends the eight-year service limit on cars to 600,000 kilometers, meaning the apps’ freelance drivers can use their cars for longer.

That’s “more aligned with a ride-share model with a large number of part-time drivers,” points out Didi’s statement.