Uber’s got big trouble in little China.
The new-age taxi company has stated that China represents its biggest market outside of the United States – and is spending millions to fund its expansion efforts into 100 new cities there over the next year.
Hardly surprising when you consider that China is the world’s largest transport market and over 150 million citizens use their smartphones to hail taxis.
But when entrepreneurship meets government regulation, you’ve got a recipe for growth getting squashed. And right now, Uber faces a head-on collision with the Chinese government.
Last weekend, China’s Ministry of Transport published draft legislation that would slam the brakes on Uber’s proposed expansion plans.
Bring On the Bureaucrats
Specifically, the measures state that:
Disruptive ride-hailing companies must absorb much of the costs of traditional taxi firms. (Funny… I always thought entrepreneurship and competition were a good thing, not something to be punished.)
Uber must register its cars as taxis, not private vehicles. Uber has challenged this issue before, arguing that because it doesn’t own a fleet of vehicles itself, it isn’t a taxi company, but more of an internet-based service provider. China’s bill also states that such companies must also have insurance in place to cover the cars and passengers.
It must have formal employment contracts with its drivers. Drivers must also have three years of experience and have an exclusivity arrangement in place that restricts them to working for just one ride-hailing company.
Uber must house and maintain servers in China and share data with transportation authorities. To this end, The Wall Street Journal says Uber has already started this process, in order to acquire an “internet service company” license in China.
The government will have greater oversight in approving which cities these companies can operate in. Not only that, authorities can dictate how many cars can operate at a given time, as well as where they operate, and what fees they can charge. (Yes… this sounds completely stifling and backwards to me, too. “Big Government” at its worst.)
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