China just threw a major wrench into Uber's biggest expansion plans
REUTERS/Kim Kyung-Hoon
China's Ministry of Transport has just issued draft rules that could pose big problems for the ride-hailing service's efforts in China, according to a report in the Wall Street Journal on Sunday.
The new draft rules would significantly tighten the regulations that ride-hailing companies such as Uber and local rival Didi Kuaidi must adhere to, requiring the services to shoulder many of the costs of traditional taxi companies.
That could be a big problem for Uber, which has apparently declared China its most important market outside of the US.
Among the proposed rules are requirements that drivers of ride-hailing services have at least three years of experience and that drivers work only for a single ride-hailing company. Ride hailing companies would have to register their cars as taxi services, insure vehicles and passengers and sign labor contracts with drivers.
The companies would also need to maintain servers in China and share data with local transportation authorities.
Not yet finalized
The rules could well change before they are finalized, and it's not clear what the timeline is for implementing a final version of the rules, the report notes.
REUTERS/Max Whittaker
And it represents the latest regulatory challenge to Uber, which has attained a whopping $51 billion valuation on investor expectations that its low-cost model and convenient technology will allow it to upend the taxi industry. The company is facing a class action lawsuit by drivers in the US seeking to be treated as employees rather than independent contractors, and politicians in countries from France to South Korea are threatening to crack down on its service.
Uber has apparently already placed servers in China, as part of its earlier effort to obtain an internet service company license in China, according to the Wall Street Journal report.
We've reached out to Uber and will update if we hear more.
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