Service firms test regulators in race to tap ride-hailing market

As China’s online ride-hailing industry expands, some entrepreneurs are looking for opportunities in the vehicles themselves. But in the race to tap the boom’s margins, companies are testing the regulatory limits.

Yesterday the Pudong New Area’s market supervision and management bureau halted the sale of drinks in ride-hailing vehicles. The decision came just three days after in-vehicle drink-vendor Mobile Go started business in Shanghai.

“Despite having a Food Circulation Permit, the space where food and drinks are being sold ... needs more discreet discussion as it concerns the passengers’ safety,” said Huang Xiaoyan, an official from the bureau.

Mobile Go quietly entered the city at the end of last month and has so far recruited some 1,000 online ride-hailing drivers.

Last month, Haibo Taxi cooperated with a third-party company to start selling snacks in its cabs. The market watchdog called off the business, for reasons that included lack of certification.

Shanghai Daily sought confirmation with the city’s traffic authority on regulations related to selling food and drinks in taxis, but the authority said there were no traffic laws forbidding such business.

“These businesses are quite new. Innovation is a good thing,” said Huang, who added that companies can’t “do whatever they want in the grey zone.”

The market watchdog suggested that companies sit down with them and discuss ways to regulate in-car vending business models.

“If the company can tell us what their appeal is then we will see whether they can resume business,” Huang said, adding that Haibo and Wangwang, the taxi firm’s third-party snack partner, so far haven’t contacted or appealed to them.

When Shanghai Daily tried to confirm the suspension with Mobile Go, a staff member at the company said they are proactively communicating with authorities to sort out the matter.

Despite such issues, newcomers continue to enter the in-care service space. One recent entrant is Have A Quick Rest, which operates paid massage seat cushions in ride-hailing cars.

According to Liu Jianbing, co-founder of the company, they have installed cushions in more than 1,000 vehicles and are planning to expand their business to taxis.

Liu said the company sought opinions from the local traffic authority and quality supervision bureau before they started business in Shanghai.

“I was told there is no regulation on massage cushions in car,” said Liu. “We are good as long as our products do not cause any accidents.”