WSJ|chinarealtime|Yesterday, 19:24
A Chinese Uber driver uses the Uber app on his phone in Beijing, China, 22 September 2015.
China’s verdict on Uber has come in: If it rolls like a taxi and charges for rides like a taxi, it should be regulated like a taxi.
The first draft of China’s national rules governing the ride-hailing sector came out over the weekend. If these rules are adopted in their current form, Uber Technologies Inc. and its main Chinese rival Didi Kuaidi Joint Co. would see much of their competitive edge over China’s traditional taxis erased. The lean startups would have to act much more like taxi companies, with the government regulating pricing and enforcing stricter oversight.
That portends a change from the current situation. App-driven ridehailing services have thus far operated in a legal gray area. Companies have been free to set their own prices and operating standards, abetting abruising battle for customers and drivers by Uber and Didi Kuaidi.
The new rules require ride-hailing companies to have licenses from local governments. So far, Didi Kuaidi has received the sole license issued, from Shanghai, while Uber has none. Both would need more licenses quick.
Carpooling is exempt from the rules, but only in a cost-sharing, not-for-profit form: drivers must set their destination–presumably by mobile phone app–before picking up passengers, and riders may only contribute to fuel and transport fees. Uber and Didi Kuaidi have begun China carpooling services in recent months, a commuting option for passengers in which they share a car with other riders heading in the same direction. How much of their business Uber and Didi Kuaidi can push through the carpooling exception remains to be seen.
The draft rules are open for a month of public comment and could change. Uber and Didi Kuaidi said they are in touch with authorities and will comply with new rules, but declined to comment on specifics.
China Real Time combed through the 15-page draft rules and picked out the main points (full document available here in Chinese).
-Carpooling exception: Private individuals may still carpool and aren’t bound by the new rules. Companies may not provide taxi services under the guise of carpooling.
Article 27: A company “cannot provide transportation service under the name of private passenger car ridesharing or carpooling.”
Article 29: Private passenger car ridesharing, or carpooling, “should not have a profit motive.” Carpool drivers must first publish their commute route. People on the same route who choose to carpool, may “share the cost (limited to fuel and transport cost) or rideshare for free.”
-Pricing: Vicious price and subsidy wars are banned. Pricing would be guided by the government. Any pricing systems or subsidies must be transparent and announced beforehand.
Article 3: “Taxis booked online will implement government-directed pricing or market-adjusted prices.”
Article 20: Operators of online-booked taxis may not offer prices below cost “with the purpose of squeezing out competitors or monopolizing the market. They cannot use unfair pricing practices that disrupt the normal market order, hurt the national interest or other operators’ legal rights.”
Any incentives and sales promotions must be publicly announced 10 days in advance.
-Driver requirements: Drivers for ride-hailing apps would need to be certified by the government and prove a safe driving record.
Article 14: Drivers must have at least three years of experience and no record of drunken driving, street racing or causing a fatal traffic accident. They should receive a certificate issued by the police that they have no record of dangerous driving.
Article 15: The company should obtain a “road transport practitioner qualification certificate” for each driver from local authorities.
-Single-platform rule: Drivers may have to pick between Uber and Didi Kuaidi. Many drivers in China currently work for both.
Article 23: “Online-Booked Taxis cannot simultaneously provide service through two or more online service platforms.”
-They will need to be like taxis: Uber and Didi Kuaidi would need to adopt some of the practices of traditional taxis, such as using standardized receipt machines and registering their vehicles as taxis.
Article 12: Cars should be registered as rental passenger transport vehicles and equipped with GPS systems and an emergency system for calling the police.
Article 18: Online-booked taxi operators must provide 24-hour service, set up a system to handle passenger complaints and “truthfully collect and record driver service information…They should use a compliant taxi meter and provide passengers with a corresponding official taxi receipt.”
-Except not completely like taxis: Some services will remain the exclusive domain of traditional cabs.
Article 23: “Online-booked taxis may not cruise around to find passengers.”
-Localization: Ride-hailing companies would have to localize their operations and data in China (which Uber has done this year). They would need to share data with the government. Uber and other foreign players would be subject to national security review.
Article 5: “Business entities whose service and registration locations are not the same should register a branch organization in the service location.”
Servers supporting operations and all business information and data should be located in mainland China. Foreign-invested operators “should also meet the foreign investment national security review requirements.”
– by Eva Dou. Follow her on Twitter @evadou
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http://blogs.wsj.com/chinarealtime/2015/10/12/call-a-cab-a-cab-key-points-in-chinas-draft-ride-hailing-rules/?mod=WSJBlog
