Beijing has issued the first business license for ride-hailing platforms on Wednesday, recognizing a car-hailing company’s online services, China Business Network reported.
The company called Shouqi Limousine & Chauffeur was the first company to successfully secure the license issued by the Beijing Municipal Commission of Transport among more than 10 applicants. It owns 20,000 cars, has 10 million users across the country and provides services in 35 cities, Yicai reported.
Car-hailing companies are required to apply for the license from municipal governments in their registered place of business, according to a new rule released by the Ministry of Transport in November last year.
In January 2017, CAR Inc became the first company in the industry to win a license in Fujian province.
However, for all these previously unsupervised service providers, that’s only the first step to becoming a legal operation. The license only recognized the company’s qualification to offer “online” services nationwide, like running car-hailing apps and settling fare payments.
To further provide “offline” services, such as offering transport services for people, companies must meet new regulations, which differ from city to city as well as gain permission from each municipal government.
In December last year, major cities like Beijing, Shanghai and Guangzhou officially introduced the so-called “strictest regulation ever” to raise the market threshold. The new rule only allows drivers with local residency permits and vehicles with local licenses to enter the market. This caused controversy because migrants, who do not have hukou in the city they are living and working in, are kept out of the market.
“Meeting the licensing prerequisites is the only way to survive in the industry,” Wei Dong, the CEO of Shouqi, told Yicai.
Thus, Shouqi has ensured all its drivers and vehicles at its Beijing business platform are natives of the capital.
Three of Shouqi’s workers have recently passed a licensing examination set up for car-hailing drivers by the Ministry of Transport. Drivers running the business without this car-hailing certificate may face fines from 10,000 yuan to 30,000 yuan (US$1,450 to US$4,360), according to a document released by Ministry of Transport in September last year.
While Didi Chuxing, the ride-hailing champion that killed off comptitor Uber China and dominates the Chinese market, has refused to disclose the progress on it gaining operational licenses, Caixin reported on January 26.
According to a market report published by CNIT-Research in mid- November last year, Didi Chuxing was a leader, accounting for 94.6% of total orders and having a whopping 96.7% share of the total active users, followed by Yi Dao and CAR Inc.
The market size of the ride-hailing industry has reached 39.42 billion yuan for the first three quarters of 2016, the report added.