Chinese authorities summon and interview 11 ride hailing firms amid crackdown

Eunice Yoon joins The Exchange to discuss China's tech crackdown and today's developments in the ride hailing app market. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

Chinese regulators have summoned and interviewed 11 ride-hailing firms asking them to rectify non-compliant behavior.

The Ministry of Transport, along with a number of other regulators including the Cyberspace Administration of China and State Administration of Market Supervision, jointly interviewed the companies including Didi, T3 and Meituan.

Chinese regulators alleged that the services are recruiting unapproved drivers and vehicles.

“It’s required that these platforms should check their own problems, rectify illegal behavior, safeguard market orders of fair competition, and create a sound environment for healthy development of the ride-hailing industry,” the Ministry of Transport said.

Didi and Meituan were not immediately available for comment when contacted by CNBC.

The ride-hailing firms interviewed by the regulators said they would look to fix any problems and stop signing up unapproved drivers, according to the Ministry of Transport.

Didi is already under pressure from regulators which opened a cybersecurity review into the company days after its high-profile U.S. listing in June. The ride-hailing giant, which commands a roughly 90% market share in China, was forced to stop signing up new users in July.

Didi’s rivals, including many of those summoned by the regulators, have tried to attract users by offering enticing discounts to riders.

Drivers in focus

Regulators said that all platforms should make sure they have the necessary approvals for cars and drivers.

Ride-hailing platforms should not entice drivers to join through fake promotions or transfer any business risks to drivers, the regulators said.

Drivers should also have enough rest time and companies should reduce the commission they take from each ride, the regulators added.

As Chinese President Xi Jinping pushes the idea of “common prosperity” — a bid to support moderate wealth for all — workers rights, particularly in the technology industry and gig economy have come under scrutiny.

Didi and Chinese e-commerce giant JD.com set up unions for their workers, according to Reuters. That’s a big move given organized labor is very rare in China.

Meanwhile, China has put a big focus on data protection over the last few months. The various Chinese regulators said companies in the sector should also safeguard users’ data. China this year passed two of major laws regarding data security and privacy that firms must adhere to.

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