Shanghai's traffic authority is stepping up efforts to crack down on illegal online ride-hailing cars from this week, promising huge fines for platforms found operating with illegal cars or drivers.
At the three train stations and two airports in the city, extra law enforcement officers have been deployed since Monday to set up more checkpoints.
Meanwhile, the authority is increasing penalties. Online ride-hailing platforms will face a fine of 100,000 yuan ($15,912) each time an illegal car is found operating on their platform.
Previously, Meituan Dianping and Didi Chuxing were fined 100,000 yuan for multiple cases involving illegal cars taking passengers.
"This time there will be no ceiling for the penalties," said Ni Shenting from the traffic authority. "If we spot 10 illegal cars from one platform a day, the platform will have to pay a million yuan penalty."
After Meituan Dianping drove into the city's ride-hailing market last month, the number of illegal cars and drivers rose unexpectedly amid cutthroat competition.
Between April 5 and 13, traffic authorities nailed 668 cases involving illegal cars including 433 from Didi Chuxing and 135 from Meituan.
Both Didi and Meituan have been trying to lure drivers with tempting offers.
A driver surnamed Lu said that from March 22, the second day after Meituan entered Shanghai, Didi Chuxing began offering drivers a 20-yuan bonus for every order they completed during rush hours.
Drivers just had to open an account on the platform, which led to them starting to pick up passengers without having the proper papers.
Shanghai regulations insist that all ride-hailing firms operating in the city must have cars with local plates and drivers with local hukou (permanent residency).
There are 13 registered ride-hailing firms which have obtained certificates issued by the traffic authority to run their businesses. However, Didi Chuxing, the city's largest ride-hailing provider, is not one of them.
"Didi has been applying for the certificate for a long time," said Zhou Yiqun from the city's vehicle management authority. "But they have not yet cleared out all the out-of-town drivers and cars."
The city has also asked the app firms to link the data of their cars and drivers to a supervisory database run by Shanghai traffic authorities and police.
"The data showed that many drivers and cars from Didi are not from Shanghai," Zhou said, "which is why we cannot grant them a certificate."
"There is nothing we can do but fine the company," Zhou told Shanghai Daily.
Once busted, an illegal driver is fined 10,000 yuan and his driving license is suspended for three months. The platform is fined 100,000 yuan.
Yang Xiaoxi, director of the city's traffic authority, said Didi Chuxing is a national company with headquarters in Beijing. Shanghai cannot ban Didi from the city, "but we are considering listing Didi as a discreditable company," Yang said.
Didi Chuxing claims that, due to privacy policies, it is difficult for the company to verify the residency status of the drivers.
Wang Mingze from Didi said the company has been making efforts to weed out illegal drivers.
"We do offline checks to make sure the actual plates of the cars match with the ones uploaded by the drivers into the system," said Wang. "We have also canceled the rewards we offered to the drivers to end the competition between companies."
But he did not comment on how the company could confirm that all their drivers were locals.
A driver surnamed Lu, who hails from Anhui Province, told Shanghai Daily that more than half of the drivers who use Didi's service are from outside the city. "This is not a very profitable job considering we drive more than 12 hours a day," Lu said. "I don't think many Shanghai locals are willing to do this."
