11 Ride-Hailing Firms, Including Didi, Summoned By Chinese Regulators Over ‘Illegal’ Practices

Eleven ride hailing companies in Chian were ordered to rectify their non-compliant behaviour by Chinese regulators after representatives of the companies were summoned and interviewed.

Interviewing of the companies, including Didi, T3 and Meituan, were conducted jointly by the country’s Ministry of Transport, together with a number of other regulators including the Cyberspace Administration of China and State Administration of Market Supervision.

Unapproved drivers and vehicles were being recruited by the companies, alleged Chinese regulators.

“It’s required that these platforms should check their own problems, rectify illegal behavior, safeguard market orders of fair competition, and create a sound environment for healthy development of the ride-hailing industry,” the Ministry of Transport said.

There were no specific comments to the media on the issue made by the ride hailing companies. 

According to the Ministry of Transport, the companies that were interviewed told the Chinese authorities that they would look to fix any issues and will not sing up unapproved drivers.

A cybersecurity review into the ride hailing company Didi was initiated by Chinese regulators in June just a couple of days after the company launched a high profile public listing by the company in the United States. And in July, the ride hailing company that arguably has a market share of almost 90 per cent in China was also forced to halt signing up of new users in the country.

A number of rivals of Didi, which included those that were summoned by the regulators, have engaged in offering enticing discounts to riders in their efforts to attract users.

It is important that the ride hailing companies ensure necessary approvals for cars and drivers, regulators said. The companies also should not engage in enticing drivers to join their fleet by offering fake promotions or against transferring of any business risks to drivers, directed the regulators.

The regulators added that companies should also allow drivers to take enough rest while also reducing the commission they take from each ride.

The idea of “common prosperity” — an effort for supporting moderate wealth for all, and workers’ rights have been pushed by Chinese President Xi Jinping, resulting in greater scrutiny of companies in the technology industry and gig economy by the regulators.  

According to reports, unions for their workers have been set up by Didi and Chinese e-commerce giant JD.com which is a significant move because of the rarity of organized labour unions in China.

In addition, unions for their workers, greater focus has been imparted by Chinese authorities on data protection. It is also the duty of ride hailing companies to ensure security of unions for their workers, the various Chinese regulators said.

Two of major laws related to data security and privacy that have to be followed by all companies were passed earlier this year in China.

(Adapted from CNBC.com)



Categories: Economy & Finance, Entrepreneurship, Regulations & Legal, Strategy, Sustainability, Uncategorized

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