- Five Chinese authorities summoned Didi, Meituan and 9 other ride-hailing services to meetings about compliance with rules.
- The platforms must fix illegal operations such as recruiting unlicensed drivers and vehicles, they said after the Wednesday meetings.
- It extends Beijing’s regulatory crackdown on the internet and education sectors to the ride hailing industry.
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Chinese authorities have called in major ride-hailing platform companies, including Didi, to tell them to fall in line with regulations as Beijing’s crackdown on influential sectors continues.
Five government agencies held a joint meeting Wednesday with the platform providers to tell them to check their operations and fix issues such as the use of unapproved drivers and cars, the Department of Transport said in a Thursday statement posted to Weixin.
“The interview pointed out that recently, some platform companies have adopted a variety of marketing methods, vicious competition, and recruited or induced unlicensed drivers and vehicles to ‘bring cars to join’ to carry out illegal operations, disrupt the fair competition market order, and affect the safety and stability of the industry,” the department said in the statement, translated from the original Chinese.
Didi, which has been under close scrutiny from Chinese authorities since going public on New York’s Nasdaq in June, was one of the companies summoned. Also in the meeting were regional industry heavyweights such as e-commerce giant Meituan’s ride hailing service, Geely’s Cao Cao and T3.
Officials laid out five requirements for the platforms. One was that they must operate in strict compliance with laws and regulations, which means they must stop using unlicensed drivers and vehicles immediately.
Another, on ensuring fair competition, said the companies must avoid using false inducements to attract drivers and ensure that drivers are paid fairly – meaning they should not take too big a commission for completed rides.
“The interview requires that each platform company should review its own problems, immediately rectify non-compliance behaviors, jointly maintain a fair and competitive market order, and jointly create a good environment for the standardized and healthy development of the online car-hailing industry,” the Department of Transport’s statement said.
Didi, Meituan and other companies did not immediately respond to Insider’s request for comment.
Investors have grown increasingly concerned that this has strengthened Beijing’s grip on private companies and data, and stocks have dropped sharply on news of higher scrutiny of industries.
Meituan closed 0.08% higher on the Hong Kong stock exchange, while Cao Cao’s parent company Geely gained 1.81% in Hong Kong by the end of the trading Thursday. Didi’s New York-traded shares were down 1.09% in premarket trading as of 7:22 am E.T. on Thursday.
“Another day, another clampdown. Dip-buyers in China equities will keep dipping their toes. However, I believe we are a long way still from repricing China equities to a level that balances the Government’s ‘enthusiasm’ for common prosperity,” Jeffrey Halley, senior market analyst at Oanda, said in a note.