Uber hopes to catch a break as China frames ride-hailing regulations

Image by Tech in Asia’s Andre Gunawan

China’s ride-hailing market may be worth tens of billions of dollars, but it is still largely in a legal gray area. There have been some city-level laws, but giant startups like Didi Kuaidi and Uber have gotten used to a certain level of official disinterest – until now.

The country’s national lawmakers are starting to catch up with the times. In Beijing yesterday, Chinese Minister of Transport Yang Chuantang announced the development of new country-wide laws to regulate the apps.

Moving away from taxis

The big fear about this legislation, representatives from China’s ride-hailing businesses told Tech in Asia, was that old taxi-centered laws would be crudely grafted onto the world of app-connected rides, which often involves ordinary individuals making money from taking passengers in their personal cars.

“Our cities are too complex, dynamic, and different in their transportation landscapes for the old established ways of taxi regulation,” says a spokesperson from Didi Kuaidi.

When Yang spoke about the legislation – still being drafted – on Monday, there was cause for optimism.

“Online ride-hailing services have been a good experience for consumers, and welcomed by some passengers. So our solution is to provide a legal way,” Yang told reporters, according to the South China Morning Post. The paper reports that there will be regulations for both snagging a taxi (big business for Didi Kuaidi) and private cars, where both Uber and Didi are competing fiercely.

Simply acknowledging that such services are a positive thing is a pretty big step for the national government. One year ago this week, Yang himself gave an interview about ridesharing that didn’t give much room for hope. When asked if personal cars could be permitted to operate for commercial use he said, “Never.”

The new legislation may follow in the tradition of Shanghai’s city-wide regulations.

The new legislation may follow in the tradition of Shanghai’s city-wide regulations in October, which legalized private cars being used in online services by giving drivers an “Internet Car-Booking License” and required companies (in that case, only Didi Kuaidi) to train, certify, and insure the drivers on its platform.

Yang did not state when the legislation will be implemented, other than saying “as soon as possible.” With Chinese bureaucracy, especially at the national level, that gives us quite a bit of wiggle room.

A battle for government influence

Representatives from Uber’s China wing were optimistic about the regulations to Tech in Asia, saying they were “highly encouraged by [Yang’s] positive remarks.”

But as the legislation becomes public, the folks at Uber will surely be on the edge of their seats, checking for signs that Didi is receiving a home-field advantage. While Uber has taken big steps to integrate itself in China – “Uber China” has set up in Shanghai’s Free Trade Zone as a spin-off company, and reps are in constant chatter with local governments – it can still be at a disadvantage.

Last fall’s Shanghai regulations were designed as a result of Didi Kuaidi’s long-term negotiations with the city’s municipal transportation commission. The regulatory framework that came out of those negotiations was technically applicable to any ride-hailing company, but certainly fit Didi like a glove – and left Uber out in the cold.