Industry observers said the Shanghai license will help Didi Kuaidi further expand in China’s online car-hailing industry as authorities in cities like Shanghai had earlier cracked down on private vehicle operators like Didi Kuaidi and Uber.
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In addition to that, Uber has set up a local subsidiary registered in the Shanghai Free Trade Zone.
Uber said on Thursday it has committed almost $1 billion in additional funding for its China expansion as it readies its application for a new government-mandated permit that will soon apply to all car-hailing businesses in the country. However, in line with their rising popularity, the Shanghai Municipal Transportation Commission initiated a pilot programme to allow mobile ride-hailing services to operate. The company has been locked in a race with Uber for market share, with both dishing out incentives to attract drivers and riders.
Didi’s licensing is a milestone for the service, which has been available for more than a year, indicating authorities’ recognition of innovation in the transportation sector, said the company in a statement on Thursday.
Didi Kuaidi said in a statement that it was working with other city governments and transportation authorities across China to get similar approvals.
Regulatory issues are the biggest roadblock for car-on-demand service providers, where many drivers don’t possess proper driver licenses.
Private taxis are illegal in China and local governments have fought against vehicle sharing apps.
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Shanghai’s policy governing Internet-based services will still be subject to the nationwide guidance to be announced by the transport ministry.
