Ride hailing platforms under spotlight as China’s transport watchdog slams ‘one sided’ pursuit of traffic, subsidies to achieve growth – South China Morning Post
What happened: Chinese vice minister of transport Liu Xiaoming criticized ride-hailing companies’ “one-sided pursuit” of platform growth and investor funding at a briefing on Thursday. He pledged industry overhauls and the promotion of “healthier development” to better protect the interests of passengers and drivers. Liu also denounced prioritizing rapid growth over sustainable business models. In response to a question about industry leader Didi, he said authorities have “taken note” of the company’s workforce reorganization, as well as its attempts to improve both user safety and service.
Why it’s important: After two Didi carpool passengers were murdered last year, China’s transportation ministry undertook industry-wide inspections. Didi took action as well, implementing a slew of safety measures and suspending its popular carpool service indefinitely. These setbacks no doubt contributed to the major losses Didi suffered last year. CEO Cheng Wei has acknowledged (in Chinese) the company’s inability to achieve profitability, and the company is planning a large-scale reorganization. While Liu appeared to approve of Didi’s latest efforts, his comments also indicate his caution towards the industry in general. For the near future at least, official scrutiny and regulation of China’s ride-hailing industry will continue.