This is the latest action of the Chinese Communist Party’s (CCP) multi-pronged crackdown on its tech companies, and the second summons after the regulators ordered 10 ride-hailing firms to set up an organization CCP members will lead on May 14.
In recent months, Chinese regulators have launched new rules on online video games, tech companies who seek to list on foreign stock exchanges, cloud computing businesses, e-commerce companies, online financing businesses, education, celebrity fan clubs, Bitcoin, and sharing economy that includes ride-sharing, bike-sharing, and home-sharing.
In the ride-hailing business, the Chinese regime first clamped down on Didi by removing its 25 mobile apps from app stores in early July, days after Didi’s $4.4 billion listing on the New York Stock Exchange on June 30. Didi is China’s ride-hailing sector leader, and shares nearly 90 percent of the market.
On Sept. 1, Didi reported that it would set up a trade union to meet with the regime’s request, and the union will operate under the supervision of All-China Federation of Trade Unions, an organization controlled by the Chinese regime. Overseas China affairs commentators and China’s scholars analyzed that the crackdown on the ride-hailing business is suppressing the privately-owned companies and creating the conditions for state-run businesses to take over the private ones.
The Chinese Transportation Ministry announced on Sept. 2 that it had summoned 11 ride-hailing firms with the Cyberspace Administration, Industry and Information Technology Ministry, Public Security Ministry, and State Administration for Market Supervision on the previous day.
The 11 companies include Didi and Meituan, which employ millions of drivers, e-commerce giant Alibaba’s AutoNavi, automaker Geely’s Caocao, state-owned Shouqi Limousine & Chauffeur, Dida Chuxing, state-owned automaker SAIC Motor’s Saic Mobility, state-owned automaker GAC’s Ruqi Mobility, T3 Chuxing, Yangguang Chuxing, and Wanshun Jiaoche.
The announcement said that the regulators ordered the companies to stop the unfair competition tactics, stop recruiting unlicensed drivers, inspect their business practices, and form a compliance plan by the end of the year.
The announcement claimed that the summons was to “promote the healthy and sustainable development” of the industry.
The Chinese authorities have cracked down on more than 10 technology sectors and the movie industry in recent months, all under the banner of anti-monopoly or guarding Chinese people’s interests.