Uber-style apps banned for private cars in China in crackdown on unlicensed cabs

The Ministry of Transport has barred private vehicle companies from offering their services via apps

Ride-hailing apps will be required to make sure no unlicensed drivers use them (AFP/Getty )

China has partially banned Uber-style apps – as officials said it was important to protect citizens from the dangers of unlicensed cabs.

The Ministry of Transport has barred private car companies from offering their services via apps – although licensed taxis may still attract business in this way.

It presents a hurdle for Uber, whose global expansion has hit a series of obstacles, including opposition from the Licensed Taxi Drivers Association (LTDA) in London and a ban in Delhi after a female executive was allegedly raped by one of its drivers.

The company also faces legal challenges in South Korea, India, Europe, California and other markets for using drivers who lack taxi licenses.

"While we encourage innovation, we prohibit private cars from using platforms to participate in the 'hired car' business," said a ministry announcement. It said companies that operate ride-hailing apps will be required to make sure no unlicensed drivers use them.

In a statement to the Financial Times, Liang Jiangwei, director of Beijing’s traffic enforcement unit, said a crackdown in the capital began on 1 January and drivers who violate the ban face hefty fines.

He said: "Some of these vehicles are 'taxi clones'. Many passengers have filed complaints."

According to the Associated Press, Uber said in a statement that its “business is running as usual,” though it gave no indication how many of its drivers might lack taxi licenses. It said the company welcomed the Ministry of Transport's support for innovation.

"Uber respects the key role the government plays in ensuring that its citizens have access to safe, affordable and efficient transportation options,"the company said.

"We appreciate our ongoing conversations with Chinese authorities and believe that consumers and communities will continue to benefit from the progress we have seen."

China's ride-hailing market is dominated by domestic competitors Didi Dache, backed by Internet giant Tencent, and Kuaidi Dache, backed by rival Alibaba Group. Those services are used mostly by taxi companies.

A third Chinese internet giant, search engine operator Baidu Inc., jumped into the market in December by investing in Uber.

Taxi companies in the United States, Europe and other countries have complained Uber and similar ride-hailing services have an unfair advantage because they are not covered by regulations that affect the established industry.

In December, the Shanghai city government detained and fined 12 unlicensed drivers who received business through the Didi Dache app.

In South Korea, the chief executive of Uber's local subsidiary was charged in December with operating an unlicensed transport company.

Police in New Delhi say they are considering similar charges. A French court has ordered Uber to remove from its app any language suggesting it was legal for its drivers to act like taxis.