UPDATED 23:48 EDT / FEBRUARY 08 2018

EMERGING TECH

Uber rival Didi Chuxing heading to Japan via new deal with SoftBank

Chinese ride-hailing giant Didi Chuxing Technology Co. is setting its sights on Japan.

Under a new deal with SoftBank Group Corp. announced Thursday, Didi will run a trial of its services in Osaka, Kyoto, Fukuoka, Tokyo and other locations with an aim of setting up shop permanently should the trial be successful. The venture, which may operate under a different name but would use Didi’s existing platform, will compete directly Uber Technologies Inc., a company that also counts SoftBank as its largest investor.

According to Reuters, the venture may face hurdles. Ride-hailing companies face strict rules that effectively bar nonprofessional drivers from offering taxi services on safety grounds. There are also legal limitations that restrict services to matching users to existing taxi fleets.

Uber has struggled in Japan. A report in November claimed that its market share was less than 1 percent of monthly rides in Tokyo thanks to existing regulations, particularly its inability to provide its Uber X service. However, that could changed, since the Japanese government is said to be considering changing the law.

“Didi and SoftBank will diligently study local market conditions and policies, and will actively engage with industry practitioners, policymakers and other stakeholders, with the aim of building an open and inclusive platform that will be available to all of Japan’s taxi operators,” Didi said in a statement. Its move into Japan adds to its international expansion plans that so far have included the acquisition of Brazilian ride-sharing service 99 Corp. in January for $600 million and the possibility of setting up shop in Mexico later this year.

The relationship among Didi Chuxing, Uber and SoftBank means that the move sees two companies that count SoftBank as their largest investors competing with each other. To complicate matters further, Uber itself owns a 20 percent stake in Didi Chuxing it obtained when it sold off its Chinese division to the company in 2016.

SoftBank and Didi Chuxing are also major investors in India’s Ola and Southeast Asia’s Grab Taxi Pte. Ltd. That means they are all related by ownership and compete against each other. When Uber loses, which is looking highly likely at the moment in Southeast Asia, it still wins.

Photo: Didi Chuxing

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