In late July, the Chinese government released new national guidelines for the operation of ride-hail services in that country, marking the legalization of services such as Uber and Lyft and Chinese ride-hail leader Didi Chuxing.

UberChina, recently acquired by Didi Chuxing, said it welcomes the regulations and will abide by them. Moreover, the company also added that the rules will play a vital role in growing the ride-sharing business in the mainland region.

“We welcome the new regulations, which send a clear message of support for ride-sharing and the benefits that it offers riders, drivers and cities,” said Zhen Liu, senior vice president of Corporate Strategy for Uber China. Liu said UberChina will fully assist policymakers to ensure the effective implication of the practices throughout China. However, the new guidelines are somewhat stricter than previous rules. Under the new laws, ride hail companies will have to adhere to the following:

• Vehicles that have reached more than 600,000 kilometers (370,000 miles) must not be used by the ride-hailing companies.
• Vehicles must be retired after eight years of service – though the owners can keep them for personal use.
• Drivers hired by the ride-hailing applications must not have any past or present criminal record, which include violent crimes, alcohol and drug related charges.
• The drivers should have at least three years of professional experience and must be licensed by the taxi regulator.

In addition, the Chinese government also removed heavy restrictions from the final draft of the guidelines such as car quotas and government set fares. However, there are strict guidelines about providing excessive discounts or low prices to entice more customers. Local authorities will set the minimum and maximum fare rates. Similarly, allowing ride-hailing vehicles to be used for personal use after eight years and adding a mileage clause to it also depicts a lenient stance by the Chinese government.

The cars could have been banned after eight years of service regardless of mileage. In addition, the newly issued regulations also give drivers the flexibility to work for both ride-hailing companies Didi and Uber.

China’s Vice Minister of Transport, Liu Xiaoming, said during a press conference that the Chinese government has provided the ride-hailing companies with a flexible environment to operate and grow in. He further added: “After input from industry stakeholders, the regulators decided to allow ride-hailing companies to operate more freely.”
The new regulations, to take effect Nov. 1, require drivers to have at least three years of driving experience and no violent criminal or drunk-driving history. The ride-hailing companies and driver vehicles must be registered with authorities.

Uber called the new rules a “historic starting point” and hailed China for becoming the first major economy to adopt comprehensive nationwide rules on ride-sharing. The Transportation Ministry, in conjunction with six other government ministries, issued the rules.

The nationwide rules could save Uber from having to fight in individual markets for consistent regulation, like it did and continues to do in the U.S, where the ride-hailing industry is regulated at the state and city level, depending on the market.

Didi Chuxing praised Chinese regulators’ decision to allow ride-share platforms to set their own pricing.

As in many countries, the rise of ride-hailing services has bred confrontations with taxi drivers in China. Cabbies have complained that the unregulated services -- which allow drivers to use their personal vehicles to give rides and have offered huge initial subsidies to drivers and riders in a bid to grab market share -- are undercutting their business and operating without sufficient oversight.

The new rules empower local taxi administration authorities to manage the ride-hail licensing platforms. In a statement, Didi noted that local governments are given “a certain discretion” to determine operating requirements. “We call for local authorities to adopt market-driven approaches that encourage innovation and new business models,” the company said.

The new rules add pressure on companies like Didi to harmonize their businesses with taxi operators.

Didi promised it would invest millions of dollars to “accelerate the integration of the online ride-hailing and taxi services through strategic partnerships with regulators, taxi companies and drivers.”

“Our shared goals are to facilitate the integration of the taxi and ride-booking industries, to help raise operating efficiency and driver income, and to provide better transportation services for Chinese passengers,” Didi said.

Among the rules outlined, vehicles can seat no more than seven passengers and must be equipped with GPS systems.