Taxi hailing service, a wake-up call for China's taxi sector

A taxi drives on the road in Beijing on March 12, 2015. [Photo: CRIENGLISH.com/Wang Mengzhen]

The legal status of mobile taxi-hailing services has been put on the agenda during this year's two sessions, as the mobile Internet technology are gradually used in the country's taxi sector. Earlier, transport Minister Yang Chuantang has lent his support on innovations in the taxi-hailing apps. He says regulations will likely to be issued in the first half of this year. Our reporter Wang Mengzhen brings us more on this issue.

High-end taxi services are widely used in top-tier cities across China. Their popularity has been fueled by the success of taxi-hailing apps like Didi and Kuaidi.

But at present, there are no laws to guarantee the safety and legal rights of passengers who use these services, since high-end taxies currently operate without a government license.

This has also cast doubts on whether the services offered by international taxi apps like Uber and other local rivals are "legal" as per current laws in China.

A motion raised by Deputy Zhang Yubiao at this year's National People's Congress aims to address this legal loop-hole.

"High-end taxis are one category of taxis, and the only difference is the lack of government supervision. We should have an open attitude towards the new service and encourage its innovation. Since it has the market demand, we should consider legalizing it."

Unlike traditional taxis, high-end taxis can only be booked using smart-phone apps. They cater to a high-end niche market that pays higher rates for more customized services.

NPC Deputy and transportation expert Cheng Dehong says high-end taxis should not be categorized as illegal black cabs run by individuals.

"In the past, we only saw the negative side of the high-end taxi service, since we always highlighted the safety concerns, tax evasion issues and other illegal activities. But given the huge demand for high-end taxies, we should look at its positive side. We can resolve many of the problems with new regulations and offer commuters a safer, more convenient taxi service."

Zhu Pingdou, Vice President of one of China's largest mobile taxi hailing apps Didi Dache, says lawmakers need to be gradually convinced of the benefits of legalizing high-end taxis.

"Local governments are doubtful at first, but they will gradually accept our service model and then finally encourage its use. As a new product using mobile internet technology, it has already spread from metropolitan areas to medium-size cities. "

Last month, Tencent-backed Didi Dache and ecommerce giant Alibaba's Kuaidi Dache said they would merge to create one of the world's largest smartphone-based transport service.

But these high-end taxi hailing apps have also led to the frustration of many traditional taxi drivers in several cities.

Du Jiang is a taxi driver in Beijing.

"Compared to other places, Beijing is slightly better but taxi-hailing apps have made a significant dent in our income. Every time I turn on this app, I can see at least dozens of high-end taxies around me on the map, and their monthly salary is much higher than ours as well."

Under the current law, the local governments can control the number of taxi licenses issued.

Therefore, ordinary taxi drivers have to pay a fee to cab companies in order to rent an authorized taxi.

The rent for Du Jiang is over 5000 yuan or 800 US dollars per month.

However, those high-end taxi services without government licenses do not have to pay this fee.

Han Deyun, a legal expert and NPC deputy, says new regulations for the high-end taxi market could serve as a blue-print to drive reforms in the entire taxi sector.

"License-based taxi service is not a problem. The key issues are, first, the development of public transportation sector still lags behind. This has put a lot of pressure on the taxi industry. Secondly, the licensing regime needs to be more open, with more transparent administration processes."

Despite the ongoing debate, leading experts have reached consensus on one thing: that market force should be allowed to play a more decisive role in streamlining the industry. But the debate is expected to continue on questions such as how regulations will ensure a fair competition of both traditional and new high-end taxi services.