Didi Chuxing Partners With SoftBank to Drive Into Japan

Chinese ride-hailing giant Didi Chuxing and Japanese conglomerate SoftBank Group Corp. are setting up a venture to tap into the urban transport market in Japan, the companies said on Friday.

The two firms will develop a ride-haling platform for Japan’s taxi fleet, leveraging Didi’s artificial intelligence know-how to create “deep learning-based demand predictions and smart dispatch systems.” Meanwhile, SoftBank will offer its “local resources and expertise,” they said in a statement.

Trial services are expected to be rolled out this year in cities including Osaka, Kyoto, Fukuoka and Tokyo.

But Didi’s foray into Japan may be challenging because the country has strict rules that bar non-professional drivers from offering taxi services due to safety concerns and limits mobile platforms to only help users book service with taxi companies.

Didi and SoftBank said in a statement that they are in talks with Japanese regulators, taxi companies and other parties for support.

The move follows a slew of deals made by Didi, China’s largest ride-hailing service provider, to expand its overseas footprint. In China, Didi’s car-booking platform is linked to more than 2 million taxi drivers who provided 1.1 billion rides in 2017. The company has sought to diversify its domestic business by offering ride-sharing, bus booking, and chauffeur and bike-rental services.

Didi has become the undisputed leader in China’s ride-hailing business after beating Uber Technologies Inc’s China unit in 2016, ending years of cash-burning subsidy wars.

But in face of an increasingly saturated market at home and stricter rules applied in the ride-hailing industry since late 2016, Didi has ventured further outside China. Didi has set up alliance with international ride-hailing startups including Singapore’s Grab, Estonia’s Taxify, India’s Ola, the Middle East’s Careem and Brazil’s 99. Early last year, Didi invested $100 million in U.S.-based Lyft, Uber’s main rival at home.

This year, Didi has also announced a partnership in Taiwan with Ledi Technology Co. Ltd. and expanded its existing services in Hong Kong.

SoftBank, a prolific investor in global technology startups, in recent years has shown greater interest in the ride-sharing market, amid a global shift in the auto and transport industry towards new technologies and business models.

“The autonomous car is definitely coming, and when that stage comes, this ride-share business becomes even more important,” SoftBank founder Masayoshi Son said last August.

SoftBank holds stakes in Indian ride-sharing startup Ola, Southeast Asia’s Grab and Brazil’s 99. It became the largest shareholder in Uber with a 15% stake last month.

SoftBank is also a major backer of Didi, making investments in two rounds of Didi’s fundraising last year. In the last funding round in December, the Chinese firm was valued at $56 billion.

Contact reporter Han Wei (weihan@caixin.com)