China-based global ride-hailing giant Didi Chuxing has launched Didi Mobility Japan, a joint venture with Japanese conglomerate SoftBank.
As ride-hailing is prohibited in Japan, Didi is focussing mainly on taxi operations. Its entrance into the local market will center on tech infrastructure support, which eyes technical and big data, and related driver and user experience optimization. A new ride-matching app for riders, drivers, and taxi operators will be available in major cities including Osaka, Kyoto, Fukuoka, and Tokyo. Didi says services will be launched within the next few months.
The joint-venture, though launched between two private enterprises, implies an expectation of national economic gains. In 2017, Japan hosted roughly 29 million foreign visitors, around 50% of whom were from Greater China (in Chinese).
Further, according to Didi, current users in Mainland China, Hong Kong, and Taiwan will soon be able to use real-time in-app Chinese to Japanese instant message translation when hailing taxis in the country.
Didi, which absorbed Uber China in 2016, tends to cooperate with existing local ride-hailing and other transport service providers when entering a new region. In 2015, Didi invested in Southeast Asian ride-hailing platform Grab, US platform Lyft, and Indian platform Ola. Cooperation with local players reduces operational costs, including asset investment and recruitment expenses.
In April, Didi launched in Mexico with its own ride-hailing service. This was Didi’s first direct operation overseas. To grab market share and attract drivers, the company said it would not charge commission fees from drivers until June 17.
This time in Japan, Didi is neither cooperating with local ride-hailing enterprises nor operating alone. The company told TechNode that its strategy of partnership building continues. Didi is offering a commission-free plan which currently specifies no expiry date.
“In the early stage of our business, we plan to focus on market cultivation and user base building. We aim to create an inclusive platform to integrate taxi enterprises around Japan. Therefore, at the moment we are having no plan to charge Japanese partner taxi companies any service fee or commission fee,” a Didi spokesperson said when asked about its cooperation model in the country.
Additionally, what’s usually ignored is SoftBank’s role. The active investment giant is doing more than just bringing tech to its home country. As Ken Miyauchi, President & CEO of SoftBank, said, “Combining Didi’s outstanding innovation with SoftBank’s extensive business base including advanced network infrastructure, I believe the joint venture can provide new value to both the consumers and taxi companies in Japan.”
Considering Japan’s power in innovation, it would not be persuasive to say the leading tech power in Asia lacks the research and production capabilities to produce and operate any Didi-like platforms. Having invested $5 billion in Didi, SoftBank will have to form close ties with Didi.
Besides, SoftBank has also invested $750 million in Grab, $250 million in Ola, and $100 million in Brazilian ride-hailing platform 99. The giant investor cares more about its global ride-hailing landscape, not simply Japan and Didi.