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Chinese regulators warn 11 ride-hailing companies to fall in line by year-end

Written by Jiaxing Li Published on     2 mins read

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Tech firms must implement new operational policies to adhere to Beijing’s goal of achieving “common prosperity.”

China’s regulators summoned 11 ride-hailing companies on Thursday and ordered the firms, including Didi and state-backed Shouqi Yueche, to halt all business actions that disrupt market order. The companies were also told to safeguard their drivers’ labor rights.

In an announcement on WeChat, the Ministry of Transport provided a review of the meeting, which involved the Cyberspace Administration of China, the Ministry of Industry and Information Technology, and other security and regulatory bodies. Regulators said companies that provide ride-hailing services must bring all “vicious competition” and “disorderly expansion” to an end, as these behaviors destabilize the market.

The ride providers are banned from recruiting drivers by publishing misleading advertisements. The 11 companies were also warned against recruiting drivers who do not hold driving licenses, and that it is their responsibility to ensure that their active drivers have enough time to rest and receive reasonable wages.

All 11 companies stated that they will comply with the demands and amend their operations to ensure the sustainability of the ride-hailing industry.

Over the past months, Chinese authorities have been curbing the influence of major tech companies by conducting antitrust investigations and data security probes. In the past two weeks, they have dialed it up a notch. The ruling party claims that internet companies have amassed excessive wealth, in contrast to Chinese President Xi Jinping’s goal of attaining national “common prosperity.”

China’s platform economy has generated millions of gig jobs, but the workers who take up this work typically lack contractual protection, social welfare, and employer-sponsored insurance.

The 11 companies whose representatives had to face regulators in person have all made changes to their workforce management policies. Earlier this week, Bloomberg reported that Didi created its first labor union. Its ranks will be filled by drivers who do not have full-time contracts with the company and who do not receive any benefits.

JD.com, an e-commerce giant and rival of Alibaba, also established a union in Beijing this week. Both organizations will be affiliated with the All-China Federation of Trade Unions, or ACFTU, a government-backed, national-level labor organization.

Read this: Researchers took over 800 trips using Chinese ride-hailing apps—here’s what they found

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