TOKYO -- The stunning growth of Uber Technologies owes much to the global rise of the "sharing economy." But while the U.S. ride-hailing company is thriving in many countries, it is having difficulty gaining traction in Japan.
There's a good reason for that: The use of private cars for paid transportation services -- Uber's bread and butter -- is prohibited in Japan except for areas with little public transport infrastructure. Japan is known for being slow to embrace innovative but unfamiliar services from abroad. But Uber is working with local authorities to achieve a breakthrough. That happened on a small scale in May, when the company began offering its ride-hailing service in a limited area of Kyoto Prefecture, in western Japan.
Masami Takahashi, president of the Tokyo-based Uber Japan, recently spoke with The Nikkei about his goal of taking the business nationwide.
Q: Uber is becoming more recognized in Japan. What changes have you seen?
A: About two years ago, people here hardly knew about us. But they suddenly began talking about the "sharing economy" about a year ago. Our strength is having a basic ride-hailing scheme that could be applied anywhere in the world. This has allowed Uber to expand into 70 countries and territories so quickly, especially in the past several years.
Q: How are things going in Japan?
A: In Tokyo, we have a ride-hailing service together with taxi companies. We have managed to shorten the average time needed to pick up passengers to about six minutes in Tokyo's 23 wards. There should be a certain level of demand here, and we will work on enhancing the service to satisfy the demand.
Q: Uber's specialty is using private cars for ride-hailing services, but opportunities in that area are limited in Japan. How do you plan to expand the service here?
A: We have two immediate goals. First, we aim to provide a solution for the country's rapidly aging society, particularly in places like rural areas with only limited public transportation. To achieve this, our scheme has to be approved as a special case under the current laws and regulations in Japan.
Second, as Tokyo prepares to host the 2020 Olympics, we want to leverage our global recognition to be the choice for foreign travelers for moving around the city. We're not simply replacing taxis but providing an innovative means of transportation.
Q: Uber has dealt with many obstacles unique to Japan. You had to cancel a pilot operation in one city due to orders from the authorities and opposition from the taxi industry. How will you cope with such challenges?
A: Our service is not so well-known in Japan, so we are focusing on gaining understanding by patiently communicating our objectives and methods. Abiding by local rules is essential, but we will seek a compromise through constructive deliberations and discussions.
In the city of Kyotango, in Kyoto, we began trial operations for a ride-hailing service in partnership with a nonprofit organization. Our side is providing the ride-hailing platform. The service was approved in a meeting involving many local stakeholders.
As Uber becomes more recognized here, we are receiving an increasing number of inquiries from local governments looking to improve access to their rural areas. We will try to start the service anywhere it is possible. I hope as many customers as possible try our service and realize that there is nothing complicated about it.
Q: How much responsibility does the service operator bear in this kind of business?
A: Background checks of drivers are one of the key responsibilities of the operators. In the case of Kyotango, we developed a special type of insurance to cover the liabilities of the nonprofit organization. We will also enhance the safety of the service through technology. For example, our platform can show the records of every ride. We can use that data to improve the service.
Q: How do you feel about the capital and business alliance that Uber and Toyota Motor announced recently?
A: It is a genuine honor to join hands with the world's top automaker. I hope the partnership will be an opportunity to promote Japanese technology more on the global stage.
Interviewed by Nikkei staff writer Sayuri Kodama