Didi drives into Japan, setting up head-on collision with Uber in world’s third-largest taxi market

28-Sep-2018 Intellasia | South China Morning Post | 6:00 AM Print This Post

Didi Chuxing, China’s largest ride-hailing platform, launches its online taxi-hailing service in Osaka on Thursday as it seeks to take a share of the world’s third-largest taxi market, setting up another battle with familiar rival Uber Technologies.

The service, a joint venture with SoftBank Corp, will see over 10 local partner taxi companies including Daiichi Koutsu Sangyo, Japan’s largest taxi fleet operator use Didi’s artificial intelligence-powered dispatch and fleet management system, the Beijing-based start-up said on Thursday.

Osaka, home to 8.83 million people and a popular destination in Japan for Chinese tourists, will become the largest overseas city that Didi operates in. San Francisco-based rival Uber launched a taxi-hailing app in Nagoya earlier this month, and Didi’s international expansion has also seen it face off against Uber in Mexico and Australia this year.

Japan is the world’s third-largest taxi market, where 240,000 licensed taxis transport 1.6 billion passengers annually with a gross merchandise volume of $13.3 billion. However, the country is one of the few developed markets where ride sharing provided by non-professional drivers to paying customers remains illegal. SoftBank’s CEO Masayoshi Son has said Japan’s regulations stifle innovation, stating in July that a ride-hailing future is “inevitable”.

Taxi operators will be able to track hires and drivers using heat maps. Didi users from the Chinese mainland, Hong Kong and Taiwan will also be able to hail a taxi from their native app, with the aid of real-time text translation and bilingual customer support, in a move aimed at capturing a surge in demand from outbound Chinese tourists, according to the company.

To build its global network Didi has been on an acquisition spree over the past few years, investing in Grab and Ola in Asia, Lyft in the US, 99 in Brazil, Taxify in Europe and Careem in Dubai, which together serve a combined 80 per cent of the world’s population, according to an earlier statement.

After a brutal price war, Didi drove Uber out of China in 2016 in exchange for a minority stake, and the Chinese ride-hailing giant counts Apple, Softbank, Alibaba and Tencent among its biggest shareholders.

The expansion continues despite the fact that Didi has not made a profit in the six years since its founding, recording a net loss of 4 billion yuan (US$582 million) in the first half of 2018, according to a letter to employees earlier this month from Didi founder and chief executive Cheng Wei.

The voluntary disclosure offered a rare glimpse into the financial state of the privately held firm as it tried to shore up public confidence following the alleged rape and murder of a female passenger by one of its drivers, the second in three months.

The Beijing-based company’s margin is only 1.6 per cent of the gross merchandise volume, while discounts and subsidies for passengers and drivers amounted to 11.7 billion yuan in the first half of the year, according to Cheng.

In contrast, Uber drove into the black for the first time in the first quarter this year. After accounting for the value of selling its Southeast Asia business to Grab and its Russian operations to Yandex, Uber turned in a profit of $2.5 billion.



Category: Japan

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