Didi Kuaidi, China's largest mobile-based car-booking services provider, has been given a formal license from transportation authorities in Shanghai for its ride-hailing services in the city.
Using privately owned cars to offer taxi-like services was not allowed in China until the Shanghai Municipal Transportation Commission gave the country's first Internet car-booking license to Didi Kuaidi.
Cheng Wei, founder and chief executive officer of Didi Kuaidi, said that the company launched the private car-hailing services in August 2014. "It took us 14 months to get the green light from the local government," he said at a forum in Shanghai on Thursday.
Didi Kuaidi, which recently completed a financing round of $3 billion, has surged ahead of Uber Technologies Inc by getting the license. According to the Shanghai transportation commission, companies need to meet a lot of criteria, including screening drivers and vehicles, providing mandatory insurance to carriers and passengers, and have servers located inside China, to get an online car-booking license.
Sun Jianping, director of the commission, said that transportation management has always been a challenge for big cities.
"Our innovation in online car-booking management shows that we have a realistic and pragmatic approach on the issue," he said.
Didi Kuaidi said in a statement that it was working with other city governments and transportation authorities across China to get similar approvals.
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 car operators like Didi Kuaidi and Uber.
Jiang Qiping, a professor at the Center for Informatization Study at the Chinese Academy of Social Sciences, said other local governments are likely to grant similar approvals.
The central government is currently drafting the national regulations for ride-hailing services.
Zhang Xu, an analyst with the Beijing-based Internet consultancy Analysys International, said: "The central government will give a lot of room for individual city governments to decide their own policies. The Shanghai model is expected to serve as a reference for future regulations."