On Monday, Chinese authorities announced that the country was on track to legitimize online ride-hailing apps like San Francisco-based Uber and Chinese transport giant Didi Kuaidi. According to The South China Morning Post, Transport Minister Yang Chuantang announced that the ride-sharing services should have clear legal standing, although he did not clarify when the new regulations would be issued.
Regulations established by the Ministry of Transport last October instructed that ride-sharing firms be licensed, that their prices be guided by the government or decided by market competition, and that their servers be set up in mainland China. Regulations for foreign operators included passing national security rules and telecommunications licenses for those who offer value-added telecoms services.
China’s ride-sharing business has been heavily subsidized as Uber and Didi Kuaidi struggle to gain share of a market that has been booming in cities across China since 2014, in spite of protests by taxi operators.
Uber, which launched its China operations in 2015, reported in February that the company is losing upwards of $1 billion a year in order to compete with local giant Didi Kuaidi. After Uber’s latest fundraising round in January, which brought an additional $2 billion to the company, Uber’s Chinese unit has been valued at $7 billion.
Didi Kuaidi, which is the product of a February 2015 merger of China’s two largest taxi-hailing firms –Didi Dache and Kuaidi Dache– has invested heavily to gain market share. The company’s backers, which include Alibaba Group, Tencent, and Lyft, have ensured that the company has pockets deep enough to sustain it for the long haul, with some counts putting its valuation at $16 billion.
Didi Kuaidi currently operates in 400 cities across China, while Uber operates in 40, although the San Francisco-based giant plans to exist in 100 Chinese cities by end of 2016.
In October, Didi Kuaidi launched an online bus-booking service that allows riders to search bus routes, tickets and initiate new routes through its application. The application is integrated into Didi Kuaidi’s mobile transportation platform, alongside the company’s other services, which include taxi-booking, online car booking, chauffeur services, and ride-sharing.