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China ride-hailing giant Didi sets sights on Japan

On-demand taxi service may launch in the spring

Didi Chuxing's smartphone app processes over 21 million rides a day.

TOKYO -- Didi Chuxing, the Chinese ride-hailing service, is partnering with Japanese taxi provider Daiichi Koutsu Sangyo to launch an app-based cab service in Tokyo as early as next spring.

Unlicensed private vehicles in Japan are generally prohibited from engaging in paid transportation, which is Didi's bread and butter. As a workaround, Didi is entering the Japanese market via taxicabs rather than private vehicles.

Daiichi Koutsu has Japan's largest taxi fleet at roughly 8,700 vehicles. Didi plans to register about 500 of those in its proprietary app by the spring, with the number to eventually rise to a few thousand. Didi will expand the service nationally by collaborating with other Japanese taxi companies.

Didi and Daiichi Koutsu are currently working out fares, operating procedures and other details. Daiichi Koutsu in turn seeks to leverage the tie-up to attract more Chinese tourists.

Didi is the world's largest ride-hailing facilitator, clocking in at over 21 million rides a day among its approximately 440 million registered users. The platform is currently available mainly in Chinese, but a Japanese-language version is expected. The company last year bought out the Chinese operations of U.S. rival Uber Technologies.

Japanese tech giant SoftBank Group owns a stake in Didi, and the Chinese company could establish a Japanese unit.

Didi and Daiichi Koutsu will face some domestic competition from Nihon Kotsu, a Tokyo-based taxi company that developed its own dispatching app for connecting riders to about 50,000 cabs nationwide across multiple cab services. Uber operates an on-demand taxi service in parts of Tokyo and uses private vehicles in the country's rural areas under a special program.

App-based ride hailing is estimated to grow from a global industry worth $36 billion in 2016 to one worth $285 billion in 2030, according to Goldman Sachs. However, some are concerned that Japanese companies will be left behind international competitors due to government regulations and other hurdles. This is already evident in the bike-sharing sector, where China's Mobike kicked off Japanese operations in August. 


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