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New Regulations for Ride-Hailing Drivers Implement on January 1

2019-01-04 10:14 Friday

Over the past few years, many Chinese people picked Didi gig for commuting or outing, which features a flexible schedule and fairly low price. Also, millions of drivers managed to earn extra money by being part-time ride-hailing drivers on Didi platform, which captures over 80% of China's e-hailing market.

However, Didi's promising gig business in China is coming to an end with the implementation of new regulations, which will extremely raise the costs of part-time driving.

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All ride-hailing vehicles in China must possess the required license to be on the roads starting January 1, 2019. Drivers without the required "double licenses" will not allowed to operate on all ride-hailing platforms in China, which means drivers have to apply a license for the car they are steering except for a driver's license. The latest regulations aim to vet the qualification of ride-hailing drivers and improve the passengers' safety.

To obtain the ride-hailing driver's permit in certain cities, drivers must provide a no criminal record certificate. In some metropolis, they must also own a local residency permit that controls where people can legally work. Many ride-hailing drivers are just migrant workers from rural parts of China, so they will become ineligible for ride-hailing platforms.

Besides, drivers have to apply for a "car license", which can prove the vehicle they are operating is a commercial one. The procedures bring additional costs to drivers who must absorb the costs of car insurance and maintenance, and commercialized vehicles will be unqualified to drive after 8 years.

Under the new legal framework, drivers can still work as independent contractors. But in effect, the new policy is eliminating casual workers. "No part-time drivers want to register their private car as a commercial one because of the high costs that come with it." A part-time driver admitted.

In Nanjing alone, Didi claims to have eliminated more than 160,000 illegal vehicles. The sharp decline in cars available on the roads inevitably leads to longer wait time and poor using experience, which may result in a fading number in users and drivers.

Apart from regulatory pressures, Didi also faces new challengers from traditional carmakers that are entering the ride-hailing industry. "Didi has educated China about what is ride-hailing. If it doesn't react swiftly to changing dynamics, the billions of yuan it's burned through will suffer from low returns," a founder of a Chinese car rental startup suggests.

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