9/28/2015

China May Require Licensing for Ride-Hailing Services

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China is pondering new rules that would require app-based ride-hailing services such as Didi Kuaidi and Uber to use only commercially licensed vehicles and drivers, sources tell Bloomberg News.

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China is pondering new rules that would require app-based ride-hailing services such as Didi Kuaidi and Uber to use only commercially licensed vehicles and drivers, sources tell Bloomberg News.

The restrictions would ban such services from charging below-cost rates for the sake of disrupting standard taxi services, according to the sources. They also say the rules would require vehicles used for ride hailing to be insured for commercial use, pay more taxes and be retired after eight years of service.

Current car-hailing services generally use private owners driving their own vehicles to carry passengers who use smartphone apps to summon them. Bloomberg notes the proposed rules would legitimize the services but also fundamentally alter their business model. It adds that the ability of local governments to control licensing could hamper the growth of the new car-hailing services.