Still remember China’s tough draft regulations on the ride-hailing industry that could potentially cut the number of drivers on major platforms like Didi by half? Well, now it’s official. Beijing and Shanghai each rolled out specific regulations for the car-hailing business yesterday.
A majority of requirements from the drafts were kept, including the types of vehicles that can be used and who can drive them. According to the regulations from both cities, drivers on the ride-sharing platforms must have local residency registration (户口). Additionally, the municipalities maintained the requirement that the cars must be registered locally, leaving many of the existing cars that registered in other provinces barred from running.
The blow is extremely significant since both the cities are known for their tremendous migrant populations. Didi’s previous estimate shows that this requirement will slash more than half of its drivers in Beijing and forces out an overwhelming majority of Shanghai drivers from the platform. According to Didi, of the 410 thousand registered drivers in Shanghai, only 10 ten thousand have a Shanghai Hukou.
Beijing has made some minor adjustments on the cars that can be used for ride-hailing. The stipulated minimum engine size (1750ml/1.8T/2.0l) was lowered to less than 1.8T and the minimum wheelbase was reduced from no less than 2700mm to 2650 mm (2600mm for cars in Shanghai). In addition, a five-month transitional period was added so the companies can make the necessary adjustments.
Most of the leading ride-sharing platforms from Didi Uber, Yidao, Shenzhou, to AA Zuche released announcements that they will comply with the regulation. However, given the usual “ask for forgiveness, not permission” approach many of these companies take, we are still skeptical that these rules will be fully followed. There is one silver lining: ride-sharing companies may face less pressure in lower-tier cities that have proposed less restrictive rules.
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