China’s new regulations on Internet-based car-booking services will require vehicles to have commercial registrations and drivers possess valid employment permits, the Economic Information Daily reported, a move that threatens a setback for Uber Technologies Inc. and Didi Kuaidi.
The regulations may be announced as soon as this month, the Beijing-based newspaper managed by the official Xinhua News Agency reported, citing people familiar with the plans. The rules will also require that car-booking services charge at least 50 percent more than taxis and possess permits for providing road transportation, according to the report.
The rules do not specify who should own the vehicles dispatched by the car-booking services, according to the paper.
Uber and Didi Kuaidi, which people familiar said have raised more than $4 billion combined from investors to fund their China expansion, are waiting for clarity of rules from the government after periodic crackdowns on unlicensed car-hire services.
Currently, both Didi and Uber sign up private car owners who then use their apps to pick up fares. The companies may have to deploy part of that cash to buy and maintain a fleet of vehicles, or tie up with commercial vehicle fleet operators in order to meet the rules.
Huang Shaoqing, a research fellow at Shanghai Jiao Tong University who was involved in the drafting of the car-booking regulations, told Bloomberg this week that a potential scenario included the government requiring car-hailing companies to own at least part of their fleets, which will increases costs.