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Thousands of taxi drivers in Shenyang, Liaoning province, reportedly blocked streets with their cars on Sunday in protest against unlicensed cars using taxi-hiring apps (打车软件) and apps-based car rental companies providing passenger services, including high-end cars. Although the drivers also complained about the withdrawal of the fuel subsidy(补贴) by the government, their main complaint was the loss of business because of the rising number of Internet-based car services companies.
On Wednesday, news reports came that Beijing transport authorities will take measures to stop the illegal “taxi business” of private cars through the newly rising Internet apps, following the footsteps of Shenyang and Nanjing.
It is not yet clear how the Shenyang city government will handle the issue and whether it will declare the services offered by market leaders such as Didi Dache, a taxi-hiring app provider backed by Tencent Holdings, and Kuaidi Dache illegal. But Shanghai transport regulators(交通管理机构) have set a rule, by banning Didi Zhuanche, or car services offered by Didi Dache in December.
Such regulations (规定) will cause a setback(挫折) to the car-hiring companies and investors that are waiting to cash in on the potentially booming business. Just last month, Didi Dache got $700 million in funding from global investors, including Singapore state investment company Temasek Holdings, Russian investment company DST Global and Tencent. Besides, the market is uncertain that Kuaidi Dache is about to finalize its latest round of funding after getting $800 million from global investors.
Regulatory uncertainties, however, could cast a shadow on the future of the Internet-based car-hiring services, which have become popular in most of China's big cities. To be fair, these companies' business model is anything but bad. For example, Didi Zhuanche works side by side with established car rental companies to provide high-end car service mainly for business-people through the Internet and mobile phone apps.
Every link in this business model chain has legal companies and services. Hence, it is hard to define it as illegal and ban it.
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