Chinese Ride-Hailing App Users Fear Gridlock as Rules Tighten

Joyce Huang, VOA News
4 November 2016 (8:27AM)

Consumers of ride-hailing apps in China are feeling the strain of a decreasing supply of private rides at an affordable price after eight city governments implemented localized regulations to rein in online cab operators this week.

Some riders told local media that online drivers are canceling their trips for fear of punishment after the Ministry of Transportation’s online car-booking rules took effect on November 1.

Others complained that regulations were more stringent than expected.

Innovation stifled

“Authorities are stifling innovation in China. [Now that] 70 percent of [private] cars will no longer stay in business, this is a wipe-out in disguise,” lamented Senior Wu, reacting to a local media report on the new rules.

The new rules "are in favor of those interest groups in the name of reforms. The move is completely regressive and hinders the progress and development of the society,” wrote another reader.

However, given China's lax enforcement, the full impact of the policy is yet to be seen.

Although the new new policy was to begin on November 1, as of Friday, only eight city governments, including Hangzhou and Ningbo in Zhejiang province, and Quanzhou of Fujian province, had begun to implement their new regulations.

A remaining 115 cities, including megacities such as Beijing and Shanghai, are still finalizing their rules, according to a statement on the transportation ministry’s website.

Impact yet to come

Hangzhou said it will allow a four-month grace period, which means no enforcement will be executed before March of next year, the statement added.

The yet to-be-finalized rules in megacities such as Beijing and Shanghai are the most stringent. Among other restrictions, regulations in those cities are expected to require the local registration of both online drivers and their private cars.

Other cities' regulations will not be as tough, according to local media reports. For example, drivers of Shenzhen-based online platforms are not required to have a local household registration, or hukou. The rules will be the same in nearby Guangzhou.

But Guangzhou is also mulling a rule to only allow car owners to register as private app drivers within the first year after they buy their cars, a rule that has been described by some media reports as the strictest regulation around.

Lauding minor relaxation by local authorities with longer-than-expected transitional periods, Didi Chuxing, the largest operator in China, said it expects the impact to be “not as dramatic” and “very manageable.”

“Our commitment has never been stronger to unleash the full potential of technology and innovation to… create the future transportation system across our cities,” Didi said in a reply to VOA.

Didi, however, refused to reveal how it plans to reposition itself in order to stay in business. Local media speculated that Didi has acquired a batch of new cars and is hiring qualified drivers as a way to mitigate the impact after the majority of its app drivers will be disqualified.

Didi had previously said that less than 10,000 of its 410,000 drivers in Shanghai will qualify under the new rules while four-fifths of its vehicles will soon be disqualified.

Career change

Meanwhile, many drivers who work with the apps, are also preparing for tougher days ahead.

“As far as we know, a number of online app drivers, which were previously cab drivers, have decided to return back to our taxi business,” said Ho, a manager of a taxi company in Hangzhou.

Traditional cab operators anticipate the sector’s competition to decline as a result of the upcoming consolidation of online ride-hailing apps.

“Outside Hangzhou, restrictions will also be imposed on app drivers across cities nationwide, including Shanghai. That means, there won’t be as many app drivers as there used to be [to compete with us],” another taxi staffer surnamed Tang told VOA.

According to a report on China’s government portal site china.org.cn, a survey found that as many as 30 percent of app drivers, once being disqualified, may risk working as unlicensed drivers of “black cars” while another 28 percent plan to switch to a different line of work. Only 14 percent will try their luck in other cities, where they will be qualified to work using online platforms.

Analysts and experts have expressed mixed views about the new rules.

Some believe that ride-hailing apps, which encourage convenient private rides at an affordable price, will boost road use by passengers who could have used public transportation, adding to the woes of traffic congestion in many cities. It is, they say, within the responsibilities of local regulators to tighten rules to contain traffic congestion problems.

Traffic congestion

However, research by Professor Yan Xuedong of Beijing Jiatong University concluded that Didi’s online ride-hailing services had played only a small part in Beijing’s highly-congested traffic.

His research, which was posted online, found that when sales of Didi shot up in last year’s summer and winter seasons, the running speed of vehicles in Beijing streets had remained steady at an average of 26.97 km per hour as well as 26.41 km per hour during the morning peak hours and 24.92 km per hour during the evening peak hours.

The rising frequency of road users is the main reason behind the city’s worsening traffic as past data show that the number of passengers using the city’s subway was in proportion to Didi’s rising sales, he added.