The icon for Didi Chuxing application, left, is displayed on a smartphone screen (Photographer: Qilai Shen/Bloomberg)

Taxi-Hailing Apps Take Root in Japan as SoftBank, Didi Join Fray

(Bloomberg) -- Using an app to order up a car ride isn’t common in Japan, even though ride-hailing has spread across the globe. That’s partly because finding a taxi usually isn’t difficult, unless it’s in the suburbs or there’s pouring rain during rush hour.

SoftBank Group Corp. and China’s Didi Chuxing are the latest companies seeking to change that. They’re teaming up to introduce Didi Mobility Japan, a taxi-hailing platform that will start trials this year in Osaka, followed by Tokyo, Kyoto, Fukuoka and Okinawa.

Long dominated by taxis, Japan’s 1.7 trillion yen ($15 billion) car-transport industry is starting to show signs of change. Sony Corp. is working on a joint venture with cab companies called “Everybody’s Taxi.” Japan Taxi, the dispatch app run by the chairman of Nihon Kotsu Co., has also been actively promoting its services. Uber Technologies Inc. is starting a car-hailing pilot program in the remote island of Awaji. With the 2020 Tokyo Olympics just around the corner, taxi operators are looking for ways to make it easier for customers to hail rides and get to their destinations.

“Technology can be not just disruptive but also collaborative and inclusive,” Didi President Jean Liu said at the briefing. She didn’t specify any taxi partners, although Didi was in talks with taxi operator Daiichi Koutsu Sangyo Co. last year.

The main reason why ride-hailing isn’t widespread in Japan is because it’s illegal for private-car owners to use their own vehicle to pick up and deliver passengers. As a result, Uber and others have followed local rules and regulations. Any ride-hailing services in Japan are essentially taxi and car-dispatch services. Earlier on Thursday, SoftBank Chief Executive Officer Masayoshi Son, who has invested in Uber, Didi and other ride-hailing companies around the world, complained about local regulations, saying that they stifled innovation.

“In Japan, ride-hailing is prohibited by law. It’s incredible that our national government is denying the future that is inevitable,” Son said at SoftBank World, the company’s annual two-day event for customers and suppliers. “Is there a country that is as stupid as that?”

Son is one of the most influential investors in ride-hailing. He has poured as much as $9.5 billion into Didi and led a $9.3 billion investment in Uber, and through SoftBank and his Vision Fund, also owns stakes in Southeast Asia’s Grab, India’s Ola and 99 in Brazil. Despite those investments Son had yet to make a move into his home turf, until now.

Foreign tourists are a key reason why SoftBank and Didi decided to introduce a ride-hailing service in Japan. The archipelago has seen 16 million visitors so far this year, with Chinese tourists making up the largest group. The companies are betting that many of them will want to use their Didi app, which has about 550 million registered users, to summon rides.

“Japan is a major destination for outbound Chinese tourists and the demand makes sense for them to develop a business here,’’ said Ken Miyao, auto consultant at Carnorama in Tokyo.

SoftBank and Didi, which first announced their partnership in February, said their app will offer Chinese-Japanese translation. Taxi operators will be able to track drivers and fares using heat maps, while passengers will be able to summon rides and rate drivers via an app. The app will also make it easier to pay for rides using Alipay and WeChat Pay, in addition to credit cards, the companies said in a statement.

Sony has signed up seven taxi company partners for its service, which it said will debut by March and have a combined fleet of more than 10,000 cars in the capital. While Uber operates a black-car hire service in Japan, it has also found some success with its Uber Eats food-delivery service.

©2018 Bloomberg L.P.