China Legalizes App-based Ride Hailing Services like Uber and Didi with Certain Guidelines and Rules

Uber and Didi

China is the largest market for ridesharing services and for long Uber has been facing tough competition from the local leader in the business, Didi Chuxing. The regulatory uncertainties in the country made it more difficult for the ride hailing companies to operate in the Chinese markets. However, in a new move on Thursday, the government legalized app-based ride-hailing services. However, there are certain rules and guidelines that the businesses need to follow.

What was most notable was that the government told local authorities to "encourage, support and guide." The new regulations will come into effect from November 1, and requires drivers to have minimum three years of driving experience. Additionally, they should not have violent criminal records or a history of drunk-driving.  The companies and driver vehicles have to be registered with the authorities.

With the new rule in place, China becomes the first major economy to adopt a comprehensive nationwide rule for ride-sharing businesses. Some countries already have such nationwide rules in place including Philippines, Mexico, Estonia and Australia. According to Uber, the new rules are "historic starting point." However, nothing's perfect and some of the rules may pose certain problems for the ride-hailing companies, especially the requirement of retiring the cars after the drivers have driven them for 600,000 km.