Xia Zhengwu checks messages from customers on his smartphone.Zhang Wei / For China Daily

"The relevant government departments will supervise online car-hailing platforms, step up efforts to crack down on illegal operations, and accelerate the formulation of policies to regulate the industry to ensure a free market for transportation and satisfy the needs of local residents," said an official from the transport commission, who preferred not to be named.

When contacted by China Daily, Didi Chuxing declined to discuss the findings outlined in the commission's report.

The new services have hit the traditional taxi industry hard, with drivers complaining that the rise in the number of private cars for hire has lured away customers and severely affected business.

Huang Youren, director of the Shenzhen Xihu Taxi Operating Management Center, said the city's cab drivers are losing significant revenue, and taxi companies are struggling to cope with the exodus of drivers, according to a report in the Shenzhen Special Zone Daily in July.

While taxies and cab drivers are subject to strict scrutiny before they can operate on the roads, it is illegal for private cars to carry passengers for profit, according to Huang.

Exodus

The situation has resulted in a growing number of taxi drivers from Youxian leaving the sector after more than 10 years.

Li Jianbing first arrived in Shen-zhen in 2000. He started driving a taxi after a friend told him about the good money in the then lucrative sector.

"My friend fled to Shenzhen in 1998 because of debts. He drove a coal truck in our county, but business was bad. He owed 8,000 yuan to various people, so he was forced to flee. He earned 15,000 yuan a month driving a taxi in Shenzhen and was able to repay his creditors in just a few months. The high salary attracted me," he said.

In 2000, 15,000 yuan was a huge salary, given that the average monthly wage for workers in Shenzhen was just 1,920 yuan. But success didn't come cheap.

In the early days, setting up as a taxi driver was costly. In 2000, Li and his business partner paid a local taxi company a "license fee" of 250,000 yuan for a five-year lease on a cab, and also paid the company a percentage of each month's revenue.

However, when the five-year lease expired, Li and his partner received just 50,000 of their initial outlay because the remaining 200,000 yuan had been deducted to pay for depreciation of the taxi.

"Despite the large sum, it was still a cost-effective deal, given the high salary taxi drivers could earn back then," Li said.

Now, the good times are over for taxi-rental companies. In recent years, rental demand has plummeted, leading to the five-year license fee falling to 90,000 yuan, which is returned in full when the contract ends.

Many of the Youxian taxi drivers were brought to Shenzhen by friends or relatives. The first group arrived in the late 1980s, when Shenzhen's bus companies used the local labor department to recruit dozens of drivers from the county.

There was no lack of applicants. "Youxian has abundant coal resources. A lot of local people are involved in coal transportation, so almost everyone can drive," said taxi driver Hou Qinghong.

Later, some of the drivers switched to driving taxis. The work was lucrative, so they urged other Youxian residents to join them. The Shenzhen media has reported that in 1996 as many as 60 percent of the city's taxi drivers were from Youxian. According to Li, they could earn up to 20,000 yuan a month.