Nanjing is reported to become the first city in China to put temporary controls on the number of vehicles that can be hailed online, according to Jiemian (in Chinese), to regulate the sector, protect rights, curb illegal practices and reduce risks in the taxi industry. By stopping the issuance of new licenses, Nanjing will put the brakes on the turf war fought there between Didi and Meituan, and will have a mixed effect on traditional cab drivers.

Nanjing’s local government has issued a document titled “Opinions on Strengthening the Regulation of the Taxi Market”. It states that from April 20, 2018, there will be a temporary block on any new taxi capacity. The PSB’s traffic department will suspend the registration of taxis for online booking and the local branch of the Ministry of Transport will temporarily stop processing taxi licenses.

Traditional taxis will also be impacted as traditional cab drivers will not be able to apply for additional licenses for picking up fares from online hailing platforms, but may benefit from the blocking of new drivers registering as Didi and Meituan drivers.

The report states that Nanjing has 8,000 taxis in active operation and 3,000 inactive. However, there are 12,000 vehicles which are licensed for online ride-hailing (both the vehicle and driver), and a further 6,000 vehicles licensed for ride-hailing but still waiting for license plates. Car leasing companies have until April 20 to get as many cars approved as possible.

Ride-hailing is having a deep impact on China’s taxi drivers. Nanjing’s move follows a recent report about taxis in the city by The Paper (in Chinese). A reporter found fleets of abandoned taxis around Nanjing, including new vehicles still well within their 7-year lifespan. The Nanjing Taxi Association told The Paper that due to intense competition for passengers and drivers by ride-hailing platforms, the number of inactive taxis rose from 1,000 to 3,000 in the past year. Taxi drivers were getting around 40 fares per day before January 2017 which fell to around 20 a day by 2018 despite still working 12-13 hour shifts. The subsequent pressure on wages saw drivers’ previously monthly take-home pay falling from RMB 5-6,000 to RMB 3-4,000 per month, dropping below the minimum wage.

Frank Hersey is a Beijing-based tech reporter who's been coming to China since 2001. He tries to go beyond the headlines to explain the context and impact of developments in China's tech sector. Get in...

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