Shenzhen disciplines Uber-like ride hailing services in the city amid unchecked expansion

·3-min read

China’s southern tech hub of Shenzhen is trying to discipline Uber-like services in the city by lecturing ride-hailing platforms on following rules in the latest cat-and-mouse game between Chinese traffic regulators and unlicensed taxis.

The Transport Bureau of Shenzhen Municipality summoned 28 ride-hailing platforms to warn them against cutthroat competition and unlicensed operations as market players strive for expansion after Didi Chuxing was banned from signing up new users and drivers.

T3 Chuxing, Ruqi Chuxing and Caocao Chuxing were among offending platforms that solicited customers offline through “vicious competition” and recruited or induced drivers to operate without licenses, the bureau said in an announcement this week.

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The companies were ordered to rectify their violations by taking measures that included purging drivers and vehicles that did not meet standards, ending harmful competition and disorderly expansion, and improving service and safety standards.

Shenzhen’s warning is part of a nationwide campaign to step up scrutiny of ride-hailing platforms. In September China’s Ministry of Transport, the country’s main ride-hailing regulator, asked local transport departments to “strengthen supervision” and “intensify a crackdown” on irregular operations carried out by the platforms.

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Meanwhile, the transport ministry has been making monthly announcements about the compliance status of ride-hailing platforms in 36 major cities, which has increased pressure on local transport authorities to go after unlicensed drivers and vehicles.

The compliance rate of 12 out of the 16 biggest platforms improved in September compared with the previous month, according to data released by the transport ministry in October. Ruqi Mobility, one of the platforms summoned by Shenzhen authorities, has remained in first place in terms of compliance since June.

Traffic congestion seen on a main road in Shenzhen, southern China's Guangdong province. Photo: AFP
Traffic congestion seen on a main road in Shenzhen, southern China's Guangdong province. Photo: AFP

China had 248 licensed ride-hailing platforms at the end of September, three more than in the previous month, transport ministry data showed.

The crackdown comes as smaller rivals rush to grab market share after the biggest player Didi Chuxing became embroiled in a cybersecurity probe and was banned from registering new users and drivers.

Beijing launched an investigation into Didi two days after the company’s US$4.4 billion June 30 initial public offering in New York. The South China Morning Post reported earlier that Chinese authorities initiated the probe because Didi had “forced its way” to a US listing in the face of government concerns.

The official Xinhua news agency said last month that the probe was aimed at addressing possible national security risks stemming from the IPO.

Following the probe, Didi’s ride-hailing orders fell 21.1 per cent in August over the previous month, according to data released by China’s Ministry of Transport in September. The latest data showed Didi’s orders slid a further 0.6 per cent in September.

Smaller competitors and investors have stepped up their efforts to fill the gap left by Didi. T3 Mobility, backed by state-owned carmakers FAW Group, Dongfeng Motor corporation and Chang’an Automobile, raised 7.7 billion yuan (US$1.2 billion) to fund its expansion, the company said last week. Its existing backers include tech giants Tencent Holdings and Post owner Alibaba Group Holding.

Separately, Caocao Mobility, backed by Chinese carmaker Geely, said it raised 3.8 billion yuan in September.

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