Uber aims to partner taxi firms in Japan to grow market

TOKYO • Uber Technologies wants to partner taxi companies in Japan because its go-it-alone approach in the country was not working, chief executive officer Dara Khosrowshahi said yesterday.

Japan's taxi market can become more efficient, even though its services are already of a high quality, he said at an event with former US ambassador to Japan John Roos.

While Mr Khosrowshahi did not announce any specific deals, he made clear that Uber would make a renewed push to expand in Japan.

It is the clearest sign yet that the ride-hailing giant will redouble its efforts to take a piece of Japan's US$16-billion (S$21-billion) taxi market.

Amid heavy operating losses in the US and a retreat from international markets - Uber has ceded China and Russia and is said to be considering a sale of its South-east Asian business - Japan has the potential to offer a rare bright spot for a company headed for a public listing next year.

"It's clear to me that we need to come in with partnership in mind, and in particular a partnership with the taxi industry here, which actually has a very, very strong product," said Mr Khosrowshahi, on his first trip to Asia as Uber's CEO.

"But that product hasn't kept up with technological change."

While Uber has clashed with taxi rivals and regulators around the world, it has played by the rules in the archipelago, relegating its business to car hires and a ride-sharing programme for the elderly in a small rural town.

The company's main success in Japan has been food-delivery service Uber Eats, which Mr Khosrowshahi said made him realise the country's potential.

Uber still faces an uphill battle in Japan. Local rivals such as Nihon Kotsu, Tokyo's largest cab company, have already released popular taxi-hailing apps.

Also, Uber's Chinese rival Didi Chuxing last year began partnership talks with taxi operator Daiichi Koutsu Sangyo, with the discussions facilitated by Uber shareholder SoftBank Group, a person familiar with the matter told Bloomberg in October.

Uber is also said to be in talks for a venture with Daiichi Koutsu.

Mr Khosrowshahi said Japan's taxi utilisation rate is 30 per cent, while Uber's is more than 50 per cent. By combining Uber's brand, technology, along with demand from tourists and partnerships with the taxi industry, he said, the result would be a "win-win" for Uber and the taxi industry.

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A version of this article appeared in the print edition of The Straits Times on February 21, 2018, with the headline 'Uber aims to partner taxi firms in Japan to grow market'. Print Edition | Subscribe