Didi banking on SoftBank alliance for Japan foothold

Didi Chuxing, the largest ride-hailing company in China, is entering the Japanese market through a taxi-hailing joint venture with SoftBank Corp.

The move comes amid a surge in the number of Chinese tourists to Japan and is part of the Beijing-based company's broader push to export its artificial intelligence technology.

Under the partnership, the two sides will build a ride-hailing platform to enhance efficiency for both taxi operators and drivers. Didi and Soft-Bank aim to commence trial services in Osaka, Kyoto, Fukuoka, Tokyo and other locations within this year.

They did not disclose the specific investment size of the joint venture.

Taxi services in Japan are known for their high quality standards and expensive prices. By integrating Didi's deep learning-based demand prediction and smart dispatch systems, combined with Soft-Bank's local resources and expertise, the two companies aim to optimize taxi ride-hailing services and increase passenger convenience, they said in a statement.

"We will 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.

According to official data, the revenue of the traditional taxi industry in Japan reached more than 1.5 trillion Japanese yen ($13 billion) in the 2014 fiscal year. During the past two decades, the number of taxi users in Japan dropped by 45 percent.

Zhao Xiang, an analyst at Beijing-based internet consultancy Analysys, said Didi has accumulated abundant experience by offering taxi-hailing services in China, but it may be challenging for the company to undertake such business in Japan.

"Softbank's local resources can help it address some obstacles. But taxi is not a popular choice for Japanese, who prefer to take subways," Zhao said.

Founded in 2012, Didi is now the world's leading online platform for taxi-hailing, with 2 million taxi drivers connected to its app. In 2017, taxi drivers completed 1.1 billion rides on Didi, which has established partnerships with about 500 taxi operators in China.

The push by Didi also coincides with a growing number of Chinese tourists heading to Japan. A report released by China's online travel giant Ctrip.com said Chinese travelers made more than 6 million trips to Japan in 2016, with total spending exceeding 100 billion yuan ($16 billion).