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New Chinese Rule Legalizing Uber

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As described in previous blog posts authored by Jenny and Tariq, the rapid expansion of Uber around the world has presented new challenges to regulators in foreign countries. It is interesting to note that China recently issued a departmental rule regulating “online taxi-booking services.” Effective November 1, 2016, the Interim Administrative Measures for the Business of Online Taxi-Booking Services will legalize online ride-hailing services such as Uber and Didi Chuxing, Uber’s Chinese rival to which Uber is selling its Chinese operation. The services must meet the requirements set out by the measures and obtain taxi-booking service licenses.

A Beijing street. Photo taken by Jeff Zhang.
A street in Beijing. Photo taken by Jeff Zhang.

The measures were jointly issued by several central government regulators including the Ministry of Transport, Ministry of Industry and Information Technology, Ministry of Public Security, and the State Internet Information Office. Under the measures, the term “online taxi-booking services” refers to “business activities whereby Internet technologies are relied upon to build service platforms that integrate supply and demand information and use qualified vehicles and drivers to provide non-cruising taxi booking services.” Accordingly, companies like Uber and Didi would be “online taxi-booking service platform companies” (hereinafter “platform companies”) by definition of the measures, that are “enterprise legal persons that build online service platforms to engage in the business of online taxi-booking services.” (Measures, art. 2.)

Meanwhile, traditional taxi services in China are renamed as “cruising taxi services.” Operation of “cruising taxi services” is subject to another departmental rule issued by the Ministry of Transport, The Administrative Measures for the Business of Cruising Taxi. This rule was revised on August 26 and is also scheduled to take effect on November 1.

Under the measures, the government would issue Online Taxi-Booking Service Licenses to qualified platform companies. (Id. art. 8.) Foreign investors must comply with relevant foreign investment laws and regulations in addition to the requirements set out by the measures. (Id. art. 5.)

Drivers and vehicles must also meet the requirements provided by the measures and obtain relevant licenses. (Id. arts. 13 & 15.) For drivers, the measures ask for a proper license for the type of vehicle they are operating and at least three years of driving experience. Drivers must have no criminal record involving violence, traffic accident, or dangerous driving; have no record of drug abuse or drunk-driving; and have not had the maximum 12 points deducted from their licenses over the last three consecutive recording cycles. City governments may formulate further requirements applicable to drivers in their respective jurisdictions. (Id. art. 14.)

For vehicles, local governments are authorized to issue more detailed standards and operational requirements; while the measures provide general requirements such as the vehicle must be a passenger vehicle with seven or fewer seats and install GPS and emergency alarm devices. (Id. art. 12.)

It’s worth noting that platform companies are also required by the measures to comply with the country’s cybersecurity provisions. For personal information and business data they collected when providing services, the companies must store and use them within Mainland China and keep them for at least two years. The measures further require platform companies to provide “necessary technical support and assistance” with this regard to the public security authority. (Id. art. 27.)

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