Didi Chuxing Drives Into Japan With SoftBank

Chinese car-hailing giant Didi Chuxing is taking its service to Japan by launching a joint venture with Japanese conglomerate SoftBank Group, the companies said Thursday.

The new venture, Didi Mobility Japan, will test a taxi-hailing service this fall in Osaka with a plan to expand into other major cities including Kyoto, Fukuoka and Tokyo. The new unit’s advanced technology may help Japan’s taxi industry to reverse a decline, the companies said.

“Didi believes artificial intelligence-based innovation may contribute to new growth of the taxi industry and the public transportation sectors,” said Jean Liu, president of Didi Chuxing.

Didi’s business in Japan will initially be limited to matching riders with professional taxi drivers. The pilot service in Osaka will be free. It is not clear whether commissions will be charged once the pilot period is over.

The Japanese taxi industry, third-largest in the world, is in decline, according to Keigo Sugano, deputy division head of SoftBank Mobile and director of Didi Mobility Japan. Currently just 40% of taxis are running with passengers, a ratio Keigo hopes Didi’s service can help bring up to 60%, on a par with China’s.

Didi’s foray into Japan comes at a time when the country is expecting a tourist boom. For the 2020 Olympics, Japan expects to welcome 40 million tourists, about half of them from China.

Japan has been known for strict regulations making it difficult for ride-hailing companies to initiate service. Masayoshi Son, chairman and chief executive officer of SoftBank, blasted Japan at a May forum for pursuing a “stupid” policy of barring non-professional drivers from working for ride-hailing services such as those have been thriving in many countries.

The U.S. ride-hailing giant Uber Technologies in March launched its first taxi-hailing service in Japan after it was blocked from setting up its own fleet of drivers in the country.

The joint venture will combine Didi's innovation with SoftBank's extensive business base including advanced network infrastructure, said Ken Miyauchi, president of SoftBank.

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

The company has ventured outside China over the past two years as the domestic market became increasingly saturated. Didi has set up alliances with international ride-hailing startups including Singapore’s Grab, Estonia’s Taxify, India’s Ola, the Middle East’s Careem and Brazil’s 99. Last year, Didi invested $100 million in U.S.-based Lyft, Uber’s main rival at home. This year, Didi launched its own car-sharing services in Mexico’s Toluca and Australia’s Melbourne.

Earlier this week, Didi received a $500 million strategic investment from online tourism service giant Booking Holdings. Both companies will offer their services on each other’s apps.

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 toward new technologies and business models.

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

SoftBank is 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 enterprise was valued at $56 billion.