China Grants Legal Status to Ride-Hailing Services

(Xinhua News Agency, July 28, 2016. Complete text:) Beijing - China unveiled its first nationwide regulation on on-demand mobility (ODM) services Thursday [July 28], granting legal status to the industry.

A document released by the State Council, China’s cabinet, featured guidelines on the registration and operation of ODM companies.

Previously, firms like China’s Didi Chuxing and American counterpart Uber had operated in a gray area in China, as it is illegal for private cars to charge passengers for journeys.

The latest document specifies that ODM firms do not need to own their fleet, effectively allowing private cars to join the party.

Vehicles and drivers providing online-ODM services can apply for a license collectively.

ODM companies will be responsible for the qualification of their fleet and drivers, the document said.

A provisional rule released by the Ministry of Transport on the same day set out detailed requirements for ODM companies and drivers.

Cars are no longer allowed to offer rides after they clock-up 600,000 km or have been in use for eight years, while drivers must have no criminal record for drug, driving, alcohol or violent offenses, according to the rule.

It requires ODM companies to pay taxes and buy insurance for passengers, while banning them undercutting market prices, which it said would disrupt market order.

Didi Chuxing and Uber’s popularity has been a source of ire among taxi drivers who must pay high franchise fees while competing with ODM services.

Thursday’s document demanded taxi companies reduce high franchise fees and encouraged firms to provide online-booking services or merge with ODM companies.

About 96.6 million Chinese, or about one in every 14, hailed a taxi via online ODM services in 2015, while 21.6 million people booked private cars online, according to China Internet Network Information Center.

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