Since May, senior executives from Didi Kuaidi have been asked to meet with traffic management, transport or public security authorities in a host of cities, including Beijing, Wuhan and Yangzhou. Officials have asked the company to stop using private cars to provide chauffeur and car-hailing services.

Didi Kuaidi is not alone in facing obstacles. Its chief rival, Uber, which ventured into China last July, has been banned in 14 countries and regions. Its Guangzhou branch was raided by local authorities, citing irregular business operations.

As the top transport regulator, the Ministry of Transport has repeatedly said it encourages innovation in the taxi industry, and sees chauffeur services as a way to satisfy diversified demand. However, it has insisted that private cars should not be allowed in for-profit operations because they don't have business licenses and cannot ensure passengers' rights and interests.

The ministry is also soliciting opinions on its newly drafted guidelines to reform the taxi industry. Officials from the ministry convened a closed-door meeting on June 3 attended by transport sector experts, managers of taxi companies and taxi drivers to discuss the reform and issues relating to ride-hailing platforms.

Company supported

Didi Kuaidi, while pledging to cooperate with authorities, has defended its businesses, saying it helps commuters, saves passengers money and helps create jobs.

Liu Qing, president of Didi Kuaidi, said authorities will gradually ease restrictions on ride-hailing providers as their services can play a crucial role in solving city traffic woes.

"Policymakers are aware that the existing traffic and transport regulations have become out of date because they were made at least 10 years ago, when the Internet was not so developed and while commuting in cities was not so painful," she said.

Ren Zhiqiang, a former businessman and well-known news commentator, backed Liu's view in a recent article published on his Sina micro blog.

"The fact that so many people are using these car-hailing apps even though they might know exactly how some of the apps' services have possibly violated current regulations has proved that this is a good thing - thanks to the apps, people now can save time and fuel, and have more options for travel," he wrote.

He added: "Why can't this good thing be justified by the law as so many people support it? (Taxi companies and government departments) should stop using clauses that stand against the public's interests as their excuses."

Xiong Dingzhong, a lawyer at Beijing Bright and Right Law firm, told China Youth Daily that it is difficult for law enforcement departments to define whether Didi Kuaidi's services have violated laws or regulations because the current definitions of taxi service and car rentals are not so clear.

"As long as these regulatory loopholes exist, no government body can make a verdict on these services' legality," he said. "For the company, or other startups in the Internet era, they should consider legal compliance issues when designing a new product or service in order to avoid legal risks."

Zhong Duliang, a researcher at China Center for Urban Development suggested the government update the current transport laws and regulations to legitimize chauffeur and car-sharing services and to regulate the burgeoning industry.

Contact the writer at zhaolei@chinadaily.com.cn