Car-hailing companies' subsidies unfair competition, minister say

(CHINA DAILY)Theministeroftransportcriticizedcar-hailingappoperatorsonMondayforthesubsidiestheyoffertousers,describingthepracticeasunfaircompetition.

YangChuantangalsopledgedtobetterregulatepaidridesofferedbyprivatecardrivers.

SpeakingatanewsconferenceinBeijing,hesaidthesubsidiesareashort-termtactictogainabiggermarketshare."Theappsareprofit-drivenandthesubsidieswillnotbehandedoutforever,"hesaid.

Taxi-hailingappDidiKuaidi,backedbyInternetgiantsincludingAlibabaGroupHoldingandTencentHoldings,isinfiercecompetitionwithUberTechnologiesinChina.Thecash-richcompaniesareheavilysubsidizingpassengersanddriverstogainabiggermarketpresence.

UberCEOTravisKalanicksaidearlierthisyearthatthecompanylostmorethan$1billioninChinalastyearfromsubsidizingusers.

DidiKuaidididnotdisclosetheamountgiveninsubsidies.Beforeahigh-profilemergeroftwolocalappslastyear,theChinesecompanyhadpledgedtosubsidizeprojectsworthmorethan2billionyuan($310million).

DidiKuaidiandUberfacearegulatorydilemmainChina.Regulationsdonotallowprivatecarstobeusedforpaidjourneys,buttensofthousandsofsuchvehiclescarrypayingpassengersinabout200citieseveryday.

Atthenewsconference,Yangdidnotsaythatprivatecarsarebeingusedillegally.

"Asetofnewrules,tailoredforonlinecar-hailingandotheremergingservices,havetobeinplace,"hesaid,addingthatlocaltransportationregulatorswillhaveabiggersayinsettingrules.

Yangsaidthatheandothercentralgovernmentofficialshadusedcar-hailingservices.

DidiKuaidiapplaudedtheminister'scomments,sayingtheyshowedthatregulatorshadlistenedtothecompany'ssuggestions.

"Wehavesuggestedthatthegovernmentgivelocalauthoritiesmorefreedominsettingregulations,"thecompanysaidinastatement.

JiaKang,aneconomistandformerdirectoroftheMinistryofFinance'sResearchInstituteforFiscalScience,saidChinaneedsonlinecar-hailingandotherinnovationsintheinformationtechnologysectortoboosttheeconomy.

"Thecountryhastolookfornewbusinessesintheserviceindustryasexportsandothereconomicdriversweaken,"Jiasaid.

InOctober,theMinistryofTransportunveiledproposedregulationsforcar-hailingappsinanattempttoreininthesector.

Undertheregulations,whichareduetotakeeffectlaterthisyear,privatecardriverswillnotbeallowedtoofferjourneysforpaymentwithoutbeingregistered.Car-bookingplatformsmustalsoobtainpermitsfromlocalauthoritiesbeforeprovidingservices.

DidiKuaidiobtainedsuchalicensefromtheShanghaigovernmentlastyeartoofferaserviceinthecity.

About21.6millionpeoplebookedprivatecarsthroughmobileappsinthefirsthalfoflastyear,accordingtotheChinaInternetNetworkInformationCenter.Itdidnothavethefiguresforpreviousyears.

DidiKuaidiaccountsformorethan80percentofthemarketshareinChina,accordingtoresearchfirmAnalysysInternational.