- License makes Uber rival first to be approved by government
- Company working with more cities on replicating Shanghai model
Ride-hailing company Didi Kuaidi said Shanghai has given it license to book privately-registered cars for trips, a move that could pave the way for expansion of the service in the world’s most populous nation.
The rival to Uber Technologies Inc. is working with more city governments in China to adopt a model similar to Shanghai’s, according to a company statement. The city is committed to meeting its citizens’ transportation needs, Sun Jianping, the director of Shanghai’s municipal transportation commission, said in the statement.
The blessing by Shanghai, a traditional testbed for economic policies including China’s first free-trade zone, could prompt other cities to follow suit in a boon to the car-hailing industry. It also gives Didi Kuaidi a leg up on Uber as both companies await the China central government’s first regulation on mobile apps for ride-hailing services.
“Didi Kuaidi has the biggest share in the Internet car-booking market in China and it is a natural thing for them to gain the license from a local government,” Zhang Xu, a Beijing-based analyst at Analysys International, said by phone. “There are still uncertainties as to how the industry will be regulated as the nationwide policy is not announced yet.”
Didi Kuaidi, the top car-hailing company in China, said last month it completed a $3 billion financing round that will boost its cash reserves to more than $4 billion. The company has been locked in a race with Uber for market share, with both dishing out incentives to attract drivers and riders.
Uber is actively preparing its application for a car-booking license as soon as possible, the company said in a statement Thursday. Uber plans to invest more than 7 billion yuan ($1.1 billion) to expand in China, which is projected to outgrow its U.S. market by the end of this year, Chief Executive Officer Travis Kalanick wrote in a letter to investors in June.
Car-booking service providers will be required to pay taxes, Sun said during a speech in Shanghai. CAR Inc., a Chinese car-rental company, has expressed interest in applying for a license, he said.
Internet-based car-hailing services should offer better-quality vehicles and services than traditional taxis and charge premiums, and the local government will crack down on operators that offer low-price services, Sun said.
Shanghai’s policy governing Internet-based services will still be subject to the nationwide guidance to be announced by the transport ministry. Didi Kuaidi said its license will require insurance coverage for as much as 6 million yuan per vehicle annually.
— With assistance by Tian Ying, and Helen Yuan