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SoftBank & China's Didi to Launch Taxi-Hailing Platform In Japan

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【Summary】Didi Chuxing, the Chinese ride-hailing giant and transportation company, has teamed up with investor SoftBank to launch a taxi-hailing platform in Japan, ahead of the 2020 Tokyo Olympics. The service would help to serve the many Chinese citizens planning to travel to Tokyo to attend the Olympic Games.

Eric Walz    Jul 20, 2018 1:05 PM PT
SoftBank & China's Didi to Launch Taxi-Hailing Platform In Japan

Didi Chuxing, the Chinese ride-hailing giant, has teamed up with investor SoftBank to launch a taxi-hailing platform in Japan, ahead of the 2020 Tokyo Olympics. The service would help to serve the many Chinese citizens planning to travel to Tokyo to attend the Olympic Games. Didi acquired Uber's China operations in August 2016.

The Chinese ride-hailing app will attempt to enter a $15 billion ride-hailing market that Japan regulators have banned to outsiders. That ban has shut out U.S. rival Uber and others looking to operate in Japan's major metro areas. SoftBank's founder Masayoshi Son has accused Japan of being "stupid" for imposing such a ride-hailing ban.

"Today ride-hailing is prohibited by law in Japan," Mr Son said at an annual company event this week. "I can't believe there is still such a stupid country. To protect the past, they are denying the future. It's a crisis situation."

Currently, local regulations in Japan bar ride-hailing services from using drivers without professional taxi licences to pick up and deliver passengers. This prevented Uber and Didi from offering ride-hailing services in the Japanese market. Instead they can only offer taxi-hailing services, partnering with local taxi companies who use their app to connect with passengers.

As part of the deal, Didi's platform, which includes artificial intelligence and data analysis to forecast passenger demand, will be available for free to all Japanese taxi companies. The service will also offer Chinese-Japanese translation and payments by Chinese users can also be made through Alipay or WeChat Pay.

"We think technology should not only be disruptive but also inclusive and collaborative," Jean Liu, Didi's president, said in Tokyo.

SoftBank and its Saudi-backed $100 billion technology fund have made significant investments on the future of ride-hailing. These investments include global ride-hailing giants Uber, Didi, Brazil's 99, India's Ola and Singapore's Grab.

Using SoftBank's network and local market expertise, Didi plans to pilot its Didi Mobility Japan joint venture in Osaka starting this fall. Next will be rollouts in Tokyo and other cities in Japan. Didi has more than 550 million active users.

Stephen Zhu, Didi's vice-president, who will head the joint venture with SoftBank, conceded that Japan was a challenge. But he added: "We have a commitment to keep on trying. We will not give up easily."

Other companies, including Japan's Sony, also plan to launch ride-hailing services in the country as Japan's traditional taxi industry is under pressure to meet a huge surge in demand. The number of foreign tourists traveling to Japan is set to reach 40 million by 2020.

Like in New York, Japan's taxi federation which includes 200,000 vehicles has lobbied against the emergence of ride-hailing services such as Uber and Lyft. The number of taxi users in Japan has nearly halved during the past two decades, while industry revenue has fallen 38 per cent from its peak in the early 1990s, according to government figures obtained by the Financial Times.

In Tokyo, Uber doesn't use its own drivers. Instead the company matches taxi company drivers with users via its app.

Local regulations have barred Uber from offering its services using cars and drivers without professional taxi licences except in remote areas where public transport is not readily available.

Uber uses its own drivers only in the depopulated part of Kyotango, a city in western Japan, and in another small town in the northern island of Hokkaido. Earlier this year, it announced it would partner with local taxi operators to launch a car-hailing pilot program in the remote island of Awaji in southern Japan.



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