Regulators' dilemma

"Premium passengers" are enticing some international app players, such as Uber, to tap into the Chinese market. According to Allen Penn, the company's chief executive officer in the Asia-Pacific region, Uber is targeting the high-net-worth population, which values time and is willing to pay more for a better experience.

The digital-hailing craze swept the nation so hard that local regulators have come up with plans to both support it and end it.

In China's most populous hub, Shanghai, authorities may replace physical hailing with "a troika" of choices: telephone bookings, mobile apps and taxi stands, said Sun Jianping, head of the Shanghai Urban Transportation Bureau.

"The act of physically hailing a cab in the street may become a rarity within five years," said Sun, whose agency centralizes the registration of hailing apps and connects them with licensed taxi providers.

Reserving a taxi makes the best use of public resources and is becoming a necessity in places such as Shanghai, where the number of taxis isn't keeping up with demand.

"It makes sense to see how that pans out," he said.

Drivers are among the biggest beneficiaries of the incentives offered by apps. Liu Shijun, a driver with more than 10 years of experience at Shanghai-based Haibo Co Ltd, said he's been able to make more money with the app.

"Normally, I'm an amateur with technology, but it's so user-friendly that I was able to show many customers how to use it," said Liu.

He said the first thing he does each day is to start up the booking apps.

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