Taxi crackdown ensnares Didi Kuaidi app service

Beijing has vowed to investigate and fine private car owners who illegally use the taxi-hailing app operated by Didi Kuaidi. [Wei Xiaohao / China Daily]

Private car owners who use platform to offer rides ruled as scufflaws

Didi Kuaidi, China's largest taxi-hailing app provider by market share, crashed into regulatory barriers in Beijing as the city's transportation authorities announced on Tuesday that private car owners that use Didi's platform to offer unlicensed taxi rides are violating regulations.

In a meeting with Didi Kuaidi, the Beijing Traffic Management Bureau said it has investigated and fined 207 unauthorized cars this year that illegally use Didi Kuaidi's platform, 161 of which are private cars.

The announcement came a day after Didi Kuaidi launched a carpooling service.

The city's transportation officials said while they encourage new business models in taxi markets, online platforms must observe existing regulations, as they vowed to continue their crackdown on illegal practices in the transportation sector.

"There is no guarantee for a passenger's safety when they take an illegal private car owners' zhuanche service that is procured through mobile apps," said lawyer Liu Ning, referring to Didi's chauffeur services, called zhuanche in Mandarin.

He warned Beijing residents from using the app service.

Although Didi Kuaidi and Uber have both partnered with insurance companies to compensate passengers in the case of accidents, lawyers warned the insurance is not guaranteed to be effective if an illegal transaction is involved.

Didi Kuaidi, created in a merger between rivals Didi Dache and Kuaidi Dache in February, has 160 million consumers and provides nearly 6 million trips a day. Over 400,000 drivers offer chauffeur services on its platform.

Didi said it will cooperate with regulatory departments to strictly follow the nation's laws. The company also promised to partner with local governments to establish a data platform to monitor cars and drivers on its platform.

In another move, Shanghai traffic and transport authorities launched an online car-hailing service platform with Didi Kuaidi on June 1.

It is believed to be the first step for the mobile platform to secure legal recognition from Chinese authorities.

The Shanghai transport commission announced it has teamed up with four of the largest taxi companies in the city and with Didi to operate a joint service platform that does not involve chauffeur services.