Ride-sharing giants Uber and Didi could be facing several serious regulatory challenges in China as at least three of the country’s major cities look to impose new rules that would govern who can drive and what vehicles may be used.
The Chinese cities of Shenzhen, Shanghai, and Beijing are all looking to pass municipal regulations on ride-hailing businesses that could wipe out many of Uber and Didi’s drivers and cars.
“There will be a sharp drop in market supply of rideshare vehicles. In Shanghai, for instance, less than 20 percent of existing rideshare vehicles meet the proposed wheelbase requirements,” said Didi on its social media outlets, which was translated by Tech in Asia.
Among the regulations include requirements that drivers have residency in the city they drive in and new policies that would limit the sizes of cars used for rideshare programs. Migrant workers from China’s lower-class economies would be barred from driving, and a large chunk of small and mid-size cars used by Uber and Didi drivers would be banned.
“There will be significant decrease in the number of rideshare drivers. Of over 410,000 activated driver accounts in Shanghai, only less than 10,000 are residents with Shanghai residency registration,” Didi continued.
These city-based requirements are not the only regulatory challenge facing Didi and Uber in China. In September, the Chinese government opened an antitrust probe into Uber’s sale of its China operations to Didi (also read: Uber Gives Up on China, Sells Business to Rival Didi Chuxing).
Leading up to the deal, Uber had been noticeably lagging behind Didi. Uber had operations in 45 cities, while Didi operated in over 400. Uber conceded victory to rival Didi Chuxing in a deal to sell their China operations to the company for $7 billion. The payment is not in cash, but rather stock in Didi.
While both companies wait on the resolution of that probe, current operations stand to be threatened by the latest series of regulatory challenges.
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Uber and Didi Face Regulatory Challenges Throughout China
Ride-sharing giants Uber and Didi could be facing several serious regulatory challenges in China as at least three of the country’s major cities look to impose new rules that would govern who can drive and what vehicles may be used.
The Chinese cities of Shenzhen, Shanghai, and Beijing are all looking to pass municipal regulations on ride-hailing businesses that could wipe out many of Uber and Didi’s drivers and cars.
“There will be a sharp drop in market supply of rideshare vehicles. In Shanghai, for instance, less than 20 percent of existing rideshare vehicles meet the proposed wheelbase requirements,” said Didi on its social media outlets, which was translated by Tech in Asia.
Among the regulations include requirements that drivers have residency in the city they drive in and new policies that would limit the sizes of cars used for rideshare programs. Migrant workers from China’s lower-class economies would be barred from driving, and a large chunk of small and mid-size cars used by Uber and Didi drivers would be banned.
“There will be significant decrease in the number of rideshare drivers. Of over 410,000 activated driver accounts in Shanghai, only less than 10,000 are residents with Shanghai residency registration,” Didi continued.
These city-based requirements are not the only regulatory challenge facing Didi and Uber in China. In September, the Chinese government opened an antitrust probe into Uber’s sale of its China operations to Didi (also read: Uber Gives Up on China, Sells Business to Rival Didi Chuxing).
Leading up to the deal, Uber had been noticeably lagging behind Didi. Uber had operations in 45 cities, while Didi operated in over 400. Uber conceded victory to rival Didi Chuxing in a deal to sell their China operations to the company for $7 billion. The payment is not in cash, but rather stock in Didi.
While both companies wait on the resolution of that probe, current operations stand to be threatened by the latest series of regulatory challenges.
You are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. Many of these companies are almost unheard of by the general public and just starting to get noticed by Wall Street. They have been pinpointed by the Zacks system that nearly triped the market from 1988 through 2015 with a stellar average gain of +26% per year. See these high-potential stocks free >>