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It’s Getting Difficult to Enter the Ridesharing Business

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that large cities like Changsha, Sanya, Jinan, Suining, and Dongguan have successively released risk warning notices for the Uber-like ridesharing industry in China. The government has been reminding workers to enter cautiously. The ridesharing platforms and the number of ridesharing vehicles are growing rapidly and the market capacity is becoming saturated. In order to “maintain the market order” of the ridesharing industry, many local governments have decided to suspend the acceptance of related businesses registrations. Only a year ago, the ridesharing market was relatively free to enter. It was regarded by many people as one of the options for flexible employment opportunities. Now many cities have suspended the acceptance of related businesses. With the rapid growth of the unemployment rate, the industry as a whole is in a situation of more drivers and fewer orders, which will lead to a reduction in unit price and per capita order volume. This will result in a decline in driver income and an increase in working hours. Over time, service quality may fade away and friction between drivers and passengers will increase, among other issues. In the past two and half years, the number of ridesharing platforms that have obtained business licenses increased by 102, an increase of 49 percent. Also, the number of ridesharing driver licenses issued increased by 2.861 million, an increase of 112.4 percent. In the past 12 months, China added 1.014 million registered ridesharing drivers and 538,000 new ridesharing vehicles. However, the total number of orders nationwide has not increased significantly.

Source: Sina, May 18, 2023