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China’s Didi Chuxing Joins SoftBank For Ambitious Taxi-hailing Platform in Japan

Jul 20, 2018 by Lousie Dang
China’s Didi Chuxing Joins SoftBank For Ambitious Taxi-hailing Platform in Japan

Chinese ride-sharing giant Didi Chuxing and Japan's multinational holding conglomerate SoftBank Corporation on Thursday announced that they will jointly launch a taxi-hailing service in Japan.

The service will be launched in Osaka from autumn this year and plans to expand to Kyoto, Fukuoka, Okinawa and Tokyo soon thereafter.

This will be the third overseas foray for Didi after Mexico and Australia.

The joint venture is largely motivated by the surge in international tourists, especially Chinese tourists in Japan, the number of which has grown by nearly 34% over the last few years.

To tap this chunk of customers, the service will have a Chinese version of the cab service's app in Japan and can pay via Wechat and Alipay.

The 2020 Tokyo Olympics is expected to further boost the service through a spurt in tourism

Didi president Jean Liu, a big fan of the traditional Japanese cab service, told reporters that Didi service in Japan will be inclusive and collaborative, rather than disruptive.

Using Didi’s strong AI and data analysis and SoftBank’s rich network and expertise in the local market, the joint venture will offer all taxi companies in Japan free technical solutions to forecast passenger demand and other value-added services.

Didi’s inclusive and collaborative strategy is also an early response to the potential regulatory challenge in Japanese market.

As the world’s third-largest cab market after USA and China, ride-hailing, however, is prohibited by law in the nation.

Japanese regulations bar car-hailing services from using drivers without professional taxi licenses.

Therefore, these platforms can only offer services by partnering with local taxi companies using the platform to contact passengers.

Japan is, therefore, a huge market with the most conservative regulations, something that has earned SoftBank founder Masayoshi Son’s criticism.

He described the regulations as protecting the past and denying the future and thus a potential crisis for the nation.

Indeed, Son and his company had gambled on the boost of global ride-sharing by heavily investing in companies including Uber, Didi, 99, Ola and Grab.

Didi is not the first player to try to wriggle a way out of the difficult Japanese market and its regulatory constraints.

Uber, which set up service in Japan earlier with limited progress, has switched to Uber Eats to find another softer way of entering the market through its food delivery service while modestly piloting its cab-hailing services in several remote and small towns of Japan.

But Didi is more ambitious.

“With 30 million drivers and over 550 million users covered by taxi-hailing, ride-sharing and food delivery services, as well as its alliances with other global players including Grab, Lyft, Uber, 99 and Taxify, Didi’s teaming up with SoftBank in Japanese market is expected to bring new value to both customers and taxi industry in the nation,” said SoftBank chief executive, Ken Miyauchi.

Lousie Dang

Lousie Dang is a Beijing-based investment analyst. She focuses on innovation and investment in emerging markets. She can be reached at wd602@nyu.edu

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