Taxi firms implement reforms, tap Internet to stay competitive
China becomes the first major country to legalize online car-booking services nationwide, after seven government ministries led by the Ministry of Transport (MOT) issued a regulation Thursday on managing the industry, to be enforced in November.
Major industry players hailed the new regulation as a milestone in the development of the industry in China.
Online car-hailing platform Didi Chuxing said in an open letter Thursday that it welcomes the new regulations and the government's endorsement of and support for the industry.
Didi Chuxing, which claims 87 percent of the Chinese market for private ride-hailing, offers services in more than 400 Chinese cities.
US-based Uber, which competes with Didi Chuxing, said it is confident to get operator's license at the earliest possible time, and it meets with requirements such as China-based servers. Uber currently offers services in more than 60 cities.
The new regulation requires private car owners to apply for a license, register their cars under the ride-booking service category, which allows vehicles to run until they reach an aggregate mileage of 600,000 kilometers. Most vehicles on Didi Chuxing and Uber are privately owned.
The MOT released draft regulations for public comment in October 2015.
The final regulation did not impose an 8-year service limit after which a car is scrapped, but only terminated its status as a commercial vehicle. The new regulation also allowed a more flexible labor contract.
Meanwhile, the traditional taxi industry has been unhappy, and has shown its displeasure by filing complaints and staging strikes against online car-hailing platforms.
"The regulation legalizes ride-sharing service providers, and this will add pressure to traditional taxi companies. Several taxi companies have already started reforms to become more market-oriented, and tapped the Internet. Those who are slow to adapt may find it difficult to survive," Zhang Xu, an industry analyst at Internet consultancy Analysys International, said in a statement sent to the Global Times on Thursday.
The new regulation allows local authorities to decide how many cars a city should have, and the fares should be based on market forces. They can also set fares when they deem necessary. It has banned operations with lower-than-cost fares "that disrupt the market order."
"It will be difficult and takes time to see how regulators calculate the cost and enforce measures," Han Biao, a professor with Shenzhen University, told the Global Times.
