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DIDI Kuaidi, China’s largest ride-hailing platform, has been licensed by the Shanghai Transport Commission for private-car booking services, in an apparent easing of tensions between regulators and ride-on-demand operators.

“This (license) is the first of its kind in China,” Cheng Wei, the company’s chief executive, told a press conference yesterday.

In a separate statement, Didi said it will buy liability insurance for all of its contracted vehicles and passengers and also tighten its requirements when selecting drivers.

“Private vehicles will be included on the platform as long as they meet certain requirements,” Cheng said.

The company is also working with other city governments around China to adopt a model similar to Shanghai’s, the statement said.

In the same document, Sun Jianping, director of the transport commission, said the city is “committed to meeting its citizens’ transportation needs.”

Though increasingly popular with users, online ride-booking services have long been warned by authorities in China that they operate in a gray area of the law, under which drivers of private cars are forbidden from carrying passengers for profit.

Drivers who pick up passengers using apps like Didi and United States-based rival Uber have been frequently fined by police in many Chinese cities.

The new licensing agreement is a milestone for the Didi service, which has been available for more than a year, indicating the authorities’ recognition of innovation in the sector, the company said in its statement.

Sun said that by issuing the license, the transport authority will be better equipped to supervise ride-hailing operators.

“If we find vehicles operating outside an authorized platform, then we know it is unlicensed,” he said.

Uber registers new unit

Meanwhile, Uber yesterday registered a subsidiary within the Shanghai Free Trade Zone in preparation for possible rule changes in the sector.

The creation of the new company will ensure Uber is fully “prepared for the upcoming regulations,” said Liu Zhen, head of strategy for Uber China.

The Ministry of Communications is currently considering how to regulate the sector.

“We will apply for the new license once the regulations are published,” Liu said.

The Shanghai subsidiary is the company’s first outside the US and will provide a springboard for a 6.3 billion yuan (US$992 million) expansion program across China, the company said.

It currently operates in 21 cities, but hopes to increase that to 100 in the next year, it said.

Both Uber and Didi Kuaidi have been keen to strengthen their positions in the ride-hailing sector, both in China and overseas.

Didi Kuaidi said last week it had invested an undisclosed sum in India’s largest taxi-booking service Ola as it continues to develop an “international strategy.” It had earlier agreed cooperation deals with regional players in the US and Malaysia.

In fundraising activities last month, Didi Kuaidi said it attracted US$3 billion, while Uber said it had received US$1.2 billion from Baidu Inc.