China Says 60% of Comments Favor Regulating Hailing Apps

Updated on
  • More than half of responses favor regulation of hailing apps
  • Those against regulation argue for market forces to decide

China’s transport ministry said more than half of the feedback it received on its draft rules on Internet ride-hailing apps supported regulating the services, paving the way for a formal framework governing how companies such as Uber Technologies Inc. and Didi Kuaidi provide rides-on-demand.

The government received a total of 6,832 cases of feedback from the public during the month-long exercise, according to a statement summarizing the responses. The ministry also held expert forums, sought opinions from local governments and heard from the major operators of the ride-booking services.

The most popular category for comment was on whether Internet car-hailing apps should be regulated, with about 60 percent in favor, arguing that they were essentially taxi services and should be governed as such. Those opposed said the government should allow market forces to decide. Feedback came from consumers, the taxi industry, drivers for the apps, as well as media and academia.

"It looks like what has been proposed is supported by the majority," said Yang Song, a Hong Kong-based analyst at Barclays Plc. "Given that, there might be no reason for them to change the regulations."

The regulations could hurt the business models of companies like Uber and Didi Kuaidi by allowing only commercially registered vehicles and qualified drivers to provide transportation services through the hailing apps. By giving local governments the authority to decide on the number of licenses and requiring offices in individual cities, the proposed rules will potentially slow the pace of expansion for these companies.

Uber has said it is pushing ahead with its expansion plans in China to operate in about 100 cities in the next year, while at least doubling its number of employees. Didi Kuaidi has also said its overall strategy to create jobs and help commuters lower the costs of traveling remains unchanged, despite the new laws possibly forcing part-time or freelance drivers to exit the industry.

The transport ministry didn’t say whether it’ll amend the draft regulations in response to the comments it has received or give a time line on the implementation of the rules.