Hangzhou Becomes Latest City to Submit Tougher Rules for Ride-Hailing Businesses

Hangzhou has become the latest Chinese city to consider tightening regulations on internet-based ride-hailing businesses, limiting the pool of drivers and vehicles that can offer services through popular apps.

The draft guidelines announced Monday require drivers to have a local household registration, or hukou, or to be a long-term, tax-paying resident of the city holding a temporary residence permit for at least six months before registering with a ride-hailing company. Hangzhou regulators also proposed a slew of detailed technical requirements and age limits for vehicles that can be used for commercial purposes.

The official statement said the rules will come into effect on Nov. 1, and will be tried out for a year before they are finalized.

Hangzhou's move follows a spate of similar draft restrictions rolled out over the weekend by large cities, including Beijing, Shanghai, Guangzhou and Shenzhen on Saturday, and Chongqing and Tianjin on Sunday.

China legalized internet-based ride-sharing services in late July, lifting a cloud of regulatory uncertainty hanging over the industry for years. The guidelines said online ride-hailing services should apply for a business license from local governments in the cities and provinces they operate in. They also said service providers should get special vehicle registration licenses and driver's licenses for those who want to pick up passengers, which differ from those issued to private car owners. But local governments have been left to decide how to implement the broad framework.

All cities except for Chongqing and Guangzhou that have announced draft rules require drivers to have a local hukou.

China's largest ride-hailing company by market share, Didi Chuxing Technology Co., warned that the rules, if passed, would drastically reduce the pool of vehicles available and drive up fares.

Rival Shenzhou Zuche, a subsidiary of China's largest car rental company CAR Inc., said the new legislations was "quite strict", but it would "not affect its business."

Contact editor Poornima Weerasekara (poornima@caixin.com)