New draft rules from China's Ministry of Transport could bring in tighter measures which companies offering ride-sharing services should strictly adhere to.
The new rules are simply requiring companies such as Uber and local competition Didi Kuaidi to run their services in parallel with traditional taxi companies which include costs and the drivers' labor contracts.
Uber and Didi Kuaidi are both seeing the huge opportunity of running their services in a nation that has over 700 million potential commuters from the urban sector. Both also see the future impact brought by the nation's growing middle class which undoubtedly has the means to upgrade from using traditional taxis .
A spokeswoman for Didi Kuaidi said that they welcomed the new regulation and would give it a careful study.
Uber also welcomed the draft and said "it demonstrates the government's recognition and support of online car-hailing services."
Some of the rules that were outlined include requiring such services to share their data with local transport officials, signing up their drivers on labor contracts, insuring both the cars and the passengers and registering their cars as taxi services.
Two days prior to the release of the draft rules, Didi Kuaidi earned a car-hailing license in Shanghai, which is believed to be the first ever awarded license from a municipal level. The company is hoping to get more licenses from other cities.
Uber, on its part, is also seeking licenses from a number of Chinese cities.
One of the first steps it had taken to localize its Chinese business is to register Uber China in Shanghai as a separate entity. Dubbed Shanghai Wubo Information Technology, the company has successfully earned the needed licenses and qualifications as an Internet company. It is said to have established its servers and China with people from China running the company as managers.
"We are in close communications with local regulators, and will...follow the spirit of the draft regulation, comply with all requirements, and continuously partner with local governments in implementing the new set of rules," said Uber.
The rules will be open for public opinion next month which could possibly bring in some changes before they are implemented. There's no information however on when the final version would be published and when it would take effect.
Analysts are seeing the new rules as a way to finally legalize ride-sharing services in China. There are some who believe that even if the draft rules are adopted, they remain susceptible to changes from municipal regulators thereby affecting their implementation.
