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China city governments collide with Didi over migrant drivers

Migrants risk fines to continue driving for ride-share app in Shanghai and Beijing

YESTERDAY by: Yuan Yang and Sherry Fei Ju in Beijing
Migrant drivers for Didi Chuxing in China’s two biggest cities are continuing to pick up passengers, risking fines in defiance of new rules barring them from working for ride-hailing platforms.

China’s ride-sharing platforms face their biggest regulatory test so far after city governments in Beijing and Shanghai approved a policy of “local cars, local drivers” on Wednesday.

Migrants from rural China constitute the core of the workforce for not only car-hailing apps but some of the country’s largest internet groups including Alibaba and Meituan-Dianping, all of which rely on low-paid drivers and couriers.

Didi Chuxing, China’s dominant ride-sharing company, which this year bought Uber's China operations, is continuing to let migrants drive in those cities, putting it on course for a potential confrontation with local governments determined to reduce the migrant population.

“I’ve had no message from Didi,” said Mr. Huang, a driver in Shanghai originally from Jiangsu, on Thursday evening. “As long as the app continues to send me orders, I will drive.”

“The regulations say you can be fined Rmb10,000 ($1,440) if you are discovered. But 99 per cent of passengers don’t want us to be checked, or they wouldn’t be able to take taxis, so they won’t report us,” added Mr. Huang.

“Ninety-nine per cent of passengers don't want us to be checked, or they wouldn't be able to take taxis, so they won't report us”——Migrant driver in Shanghai

Two other drivers in Shanghai, who did not wish to be named, confirmed that Didi had not notified them about the new regulations. Two migrant drivers in Beijing said Didi had told its drivers to continue business as normal, and that Didi said it was talking with local authorities.

Beijing’s regulations have a five-month grace period for implementation, whereas Shanghai’s restrictions went into effect on Thursday.

“It still takes time to hammer out many details of implementing the rules, and we are in close consultation with Beijing, Shanghai and other cities, and are optimistic about the process,” Didi said.

“Didi believes the local governments and Didi share a common interest in ensuring a smooth transition while sustaining a friendly environment for the new rideshare industry,” the company added.

But a “smooth transition” does not mean Didi can change the rules. “The regulations, which have already been issued, are very unlikely to be changed,” said Gu Dasong, a professor at Southeast University Law School.

“The possibility that Beijing will make changes to the regulation is very small,” agreed Ma Qiji of the AliResearch Institute, an internet research firm. “Controlling population numbers in the capital city is a central government strategy. The political factors outweigh the concerns for the [ride-sharing] market, and for employment rights.”

40%of Beijing and Shanghai’s 43m residents are from outside the city

About 40 per cent of Beijing’s and Shanghai's combined 43m residents are from outside the city, according to the cities' statistics bureaus.

China has over 270m rural migrants who have moved to cities to seek a better livelihood. But they are kept under firm restrictions by China's internal passport rules, the hukou system, under which people receive different benefits depending on whether they have an urban or rural registration and where they are registered.