Beijing Has Summoned 11 Ride-hailing Companies For Allegedly Engaging In Illegal Behavior

Beijing has summoned 11 ride-hailing companies for allegedly engaging in 'illegal behavior'

A total of 11 ride-hailing companies were summoned and interviewed by Chinese regulators, who demanded that they correct any illegal behavior.

Several other regulators, including the China Cyberspace Administration and the State Administration of Market Supervision, participated in joint interviews with the Ministry of Transport in order to gather more information.

According to Chinese regulators, the services recruit drivers and vehicles that are not properly licensed.

As stated by the Ministry of Transportation, “it is required that these platforms address their own issues, correct illegal behavior, protect market orders that promote fair competition, and foster a healthy environment for the ride-hailing industry's growth.”

Didi and Meituan did not respond to a request for comment from CNBC within minutes of receiving it.

Reports from regulators indicate that those interviewed by the Ministry of Transportation stated that they would work to resolve any issues and that they would stop hiring drivers who had not been approved by the Ministry of Transportation.

Already, Didi is coming under fire from regulators, who launched an investigation into the company's cybersecurity practices just days after the company's high-profile June IPO in the United States of America. It was forced to suspend new user registrations in July after the ride-hailing giant, which controls roughly 90 percent of the market in China, was forced to do so.

While Didi's competitors have been summoned by authorities, many have attempted to entice users to use their services by offering riders attractive discounts.

Drivers are the focal point of attention

According to regulators, all platforms should make certain that they have received the necessary approvals for cars and drivers before launching.

In their statement, the regulators stated that ride-hailing platforms should not entice drivers to join by offering false incentives or transferring any business risks to the drivers themselves.

Additionally, the regulators stated that drivers should be given adequate rest and that companies should reduce their commission on each ride they provide.

As Chinese President Xi Jinping promotes the concept of "common prosperity" in an effort to ensure that everyone has access to moderate wealth, the rights of workers, particularly in the technology sector and the gig economy, have come under increased scrutiny in the country.

According to Reuters, Didi and Chinese e-commerce behemoth JD.com have organized labor unions for their respective workforces. Given the fact that organized labor is extremely rare in China, this is a significant step forward.

While all of this is going on, China has recently placed a strong emphasis on data protection. Several Chinese regulators have stated that companies operating in the sector must also protect the data of their customers. This year, the People's Republic of China passed two significant data security and privacy laws, which all businesses must comply with.