China Reduces Fines for Ride-Hailing Violations, Aims to Push New Legal Framework

Isaiah Richard, Tech Times 06 December 2022, 08:12 pm

The Chinese government decided to go light on the fines for ride-hailing services in the country, with revisions to the amount to pay the government for their violations. It comes from the directives of China's transport ministry and other agencies concerned with this regulation. However, the country is not changing anything for those caught operating without a license.

The latest changes for its fines and violations are a result of China's recent investigation and a court battle with its prominent ride-hailing app, DiDi Chuxing.

China Reduces Fines on Ride-Hailing Violations in the Country

(Photo : Fikri Rasyid on Unsplash)

China's authorities in the local transportation sector are now adjusting the fines for ride-hailing violations in the country, now imposing fewer fees for violations to improve its local administrative focus. According to the South China Morning Post, the move comes from the decision of China's State Council to reduce the penalties for offenders.

Now, the fees are as follows:

3,000 yuan (US$431) to 10,000 yuan - for violators who operate without the proper licenses.
200 yuan to 2,000 yuan - for drivers who operate despite lacking or not having the proper qualifications to engage in ride-hailing services.

Previously, China is asking for as much as 10,000 to 30,000 yuan for these violations in its ride-hailing sector.

DiDi Left a Massive Void in China's Ride-Hailing Needs

According to Financial Times, DiDi Global was previously fined as much as $1 billion by the Chinese government for its data privacy issues after an extensive investigation against the country. Now, rivaling companies are on their way to filling the void that DiDi left, as its services ceased to exist in the country.

In addition to this, China's revised fines aim to push a new legal framework for ride-hailing services, especially after the recent issue with DiDi.

China and its Previous Issue with DiDi

DiDi faced Beijing's iron hand after facing a cybersecurity investigation from the country's lawmakers and regulators, and during this time, people were unable to sign-up for the company's services. Apart from this investigation, the company saw its shares from investors and stakeholders fall, with the government probe proving to be a massive obstacle for them.

It came after DiDi's quest to raise its IPO, and after successfully doing so, the Chinese government started its probe into the company which discovered a lot behind it.

This came at a time when DiDi Global is on its track to grow the company, centering on its newly-launched operations in South Africa which it shortly shut down amidst this debacle with its government.

There were fears regarding sensitive data leaks from DiDi's end, something which the Chinese government investigated for the past months, and recently met its end, asking the company to settle to affected users.

Ride-hailing apps like DiDi in China are as important as Uber or Lyft is in the United States. In China's case, the need for it is massive now, hence the lighter fines for violators who still operated despite lacking credentials or licenses on the company's public transportation needs.

For now, China's need for a new legal framework and better local administration towards the ride-hailing app is its focus for its entirety.