MOT Legally Recognizes Online Car-Hire Industry

On July 28, the Ministry of Transportation (MOT) and State Council officially published the Interim Measures for the Administration of Online Car Hire Operations and Services (Measures) and the Guiding Opinions on Deepening Reforms in the Taxi Industry (Guiding Opinions), effective November 1.

The guidelines and measures are viewed as a milestone for the online car-hire industry, as it is finally recognized after operating in a grey area for years. This is also a big step forward for regulating innovative Internet services that integrate traditional industries. However, strict requirements on data localization, server localization, telecom licenses and commitments to government access of data among others still continue to create many barriers for foreign players.

On August 1st, shortly after the release of the Measures and Guiding Opinions, two big online car-hire players, Didi and Uber China announced a merger. Together the two companies own over 90% of the online car-hire market share in China.

On August 2nd, following the announcement, the Ministry of Transportation (MOT) issued the Specifications for app-based ride-hailing operation services (draft for comment) as a further implementation of the measures. Deadline for comments is August 31.