Shanghai’s Plan to Allow Car-Sharing Apps Seen Benefiting Uber

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Shanghai will allow car-hailing services via mobile apps starting next month, the first city in China to legitimize an industry popularized in the U.S. by Uber Technologies Inc.

Drivers for Didi and Kuaidi, the two leading Chinese car-hailing apps that recently merged, will be registered under the same information technology platform for taxis, removing their status as “black cars,” or unlicensed cars-for-hire, according to a statement posted on the Shanghai government’s website. Uber isn’t included in the pilot project.

The move by Shanghai, a traditional testbed for economic policies including the country’s first free-trade zone, may prompt other cities to follow suit in a boon to the car-sharing industry. That may help Uber, whose operations have come under scrutiny in other cities in the country.

“Shanghai is a start, we’ll definitely see more city authorities work with car-hailing app companies to legalize such services,” said Zhang Xu, a Beijing-based analyst at Analysys International. “Once the platforms are up, it’ll benefit the whole sector and all companies that offer such services.”

China’s car-hailing industry is dominated by Didi and Kuaidi -- both apps started out as Uber clones -- and now account for a combined 78 percent of ride bookings, with Uber a distant third at 11 percent, according to Analysys estimates. There were 172 million mobile app ride-booking accounts as of the end of last year.

Breakthrough Reform

“It is the very first breakthrough in reforming the designated driving services,” said Li Min, a Didi spokesman. “Didi is the first car-hailing software company involved in such a program with the government and there are no other cities joining Shanghai on this front at the moment.”

The Shanghai plan contrasts with an announcement by China’s transport ministry in January, which banned private cars from offering unlicensed taxi services via mobile-phone apps. In Beijing, the city government has fined unauthorized vehicles for offering services via apps including Uber, Didi Taxi, Kuaidi and, China National Radio reported in January.

Local media reported raids by authorities on Uber’s offices in Chengdu and Guangzhou in the past month, which were later described by the company as routine visits.

Huang Xue, Uber’s Beijing-based spokeswoman, declined to comment on the Shanghai plan.