Beijing, Jan 10: After India, Uber ran into trouble in China too as the country banned drivers of private cars from offering services through taxi-hailing apps, citing passenger safety concerns. [Uber cab rape in India: What you need to know]
The nationwide ban came as local authorities cracked down on unlicensed drivers using apps as camouflage and taking passengers for profit.
Under the new rules, only licensed taxis may use hailing apps which are hugely popular in China.
This could be a setback for US-based Uber, which ran into trouble in India, Europe, South Korea California for using drivers without proper taxi licenses.
The latest ban came nearly a month after one of its drivers was arrested for allegedly raping a 27-year-old woman in Delhi following which the international cab-booking service was banned in the capital city.
In China, the taxi apps filled a big vacuum as regular taxis at times become impossible to get, especially in cities like Beijing, with most of the taxi drivers moody, arrogant and choosy.
Some even started demanding money above the meter rates, which were raised last year.
The Chinese transport ministry has ordered app developers to rule out private cars from their platforms to ensure that all vehicles are owned by taxi or car-hire companies out of concern for passenger safety, official media here reported.
Under Chinese law, a private car owner cannot take passengers for profit. However, some vehicles offered on the basis of taxi-hailing apps are owned by drivers.
The Shanghai government detained 12 drivers using taxi-hailing business via Didi Dache, one of the most popular apps, and fined each driver 10,000 yuan ($1,630) in December.
Beijing authorities have also started to get tough with unlicensed drivers.
The action against unlicensed drivers has not been without public discontent as the vested interests - taxi companies - are untouched, state-run Xinhua news agency reported.
The ministry said it recognised the luxury car pick-up services, which it described as innovative model and blurring the boundary between taxis and car rental business.
The ministry encourages innovation and just wants to make the business develop in an orderly manner and in accordance with the law. It will continue to investigate and survey the new business, it said.
Meanwhile, thousands of taxi drivers in Nanjing city in Jiangsu province joined a strike that has swept the country since Thursday afternoon demanding a reduction of the monthly franchise fees paid to taxi companies, which eat up a large share of their revenues.
Many taxis on the road refused to carry passengers in the city that now has about 11,700 taxis, according to Nanjing's transport department.