Cosmetic win for Uber in Japan
San Francisco’s Uber was quick to announce it first “deal” in Japan after 4 years of presence, at least on the App Store. Today’s Uber users in Japan can either hail an Uber Black, at a pricing exceeding the cost of a regular, convenient, safe and clean taxi or order food on the Uber Eats application, popular with the many Japanese single professionals in search of a quick fast-food fix.
The Uber deal covers Nagoya, Japan’s third largest city (over 10 million people) and doesn’t offer Uber’s traditional ride hailing service; instead, the user will have access to 350 taxis owned by Fuji Taxi Group, or less than 5% of the total number of taxis in Nagoya.
Uber says that the agreement with Fuji will serve as a template for future and additional partnerships in the $16 billion Japanese taxi market. Brooks Entwistle, Uber’s head of Asia, counts on a domino effect and hopes that more companies will join the platform.
Uber and Airbnb
Uber, but also the Chinese hailing giant Didi, have been relentlessly trying to fight the Japanese regulations, which, with support of the strong taxi-lobby, forbid unlicensed services, unregulated pricing and uninsured drivers. At least, that’s the storyline.
Airbnb listed house owners were surprised when, a couple of months ago, the police showed up at their houses and told them that it was illegal to list their property on Airbnb, leaving many tourists surprised and without lodging in Tokyo. Interesting is that the regulators decided not to attack Airbnb, the company, but the property owners instead.
Not cool to break the law
If companies such as Uber and Airbnb could count on strong grassroot support and goodwill in the US by stating that laws are outdated and sharing economy is the future, they miscalculated how the Japanese population would react to this Robin Hood attitude.
The Japanese have no issue with regulations, nor with regulators. They are used to the impact that administration has on their lives and even appreciate how a strongly regulated society contributes to stability, safety and social harmony. Japan is one of the safest and most comfortable countries in the world – if it comes with a bit of admin, that’s a small price to pay. Uber’s tactics, openly violating the law, was consequently and openly rejected by regulators and population alike.
The “Prince of Taxis”
Enters Ichiro Kawanabe, the young chairman of taxi giant Nihon Kotsu, Japan’s largest taxi company. Cheered by the taxi lobby and supported by legislation, Kawanabe-san is known for his un-Japanese outspoken opinion of Uber. “As a company, Uber is just too bad – I don’t like them”, he was heard telling a Financial Times journalist.
Nevertheless, the Prince is learning from his enemies. He’s working hard to copy the Uber model, but in a regulated way and with the objective to reform the taxi industry. On the menu are: taxi sharing, responsive pricing, app based technology, subscription based mobility.
How to get around in Tokyo today?
For those who don’t speak Japanese, traveling around Tokyo can be frustrating. Thousands of easy accessible taxis, but no driver who speaks English; thousands of trains, but such a challenge to understand the network mix of private and public train companies, local/intercity/fast trains that all run on the same tracks and that are indistinguishable for the untrained (no pun…) eye.
Japan Taxi is an application that will allow the user to call a taxi that’s in the neighbourhood, make a reservation or calculate a fare. Downside of this application is that the – usually older – taxi driver is not a fan. The user also needs a registered Japanese phone number and registration is simply painful. Result: no one uses it and it doesn’t work.
Then there’s Furukuru, an easy and fun application that offers a limited, but useful service. The users need to shake their smartphone, which informs the taxi driver about their location. The taxi driver can then decide to drive past this location, but won’t stop, unless the user is standing outside and hails the taxi. It’s simple and it works, but it’s not a real hailing application.
Not only Uber and Didi are eying the Japanese market, also local players want their part of the cake. Sony has unveiled a collaboration with 6 major taxi companies, which can potentially lead to a taxi hailing application, covering over 10,000 taxis in Tokyo.
In the meanwhile, regulations can change. If they change for the Prince of Taxis, they will also change for Uber. It’s at least what Toyota and Softbank, 2 key investors with respectively $500 million and $9 billion (!) worth of investment, hope.
And for the Fleet Manager?
The regulatory restrictions as well as the incompatibility between Japanese and non-Japanese marketing techniques protect the taxi business, but also slow down the evolution of mobility solutions. Japan, even if tech-savvy and modern, is lightyears behind the US, Europe and the rest of Asia in terms of mobility. JALA, the Japanese Leasing Association, has even rejected to include the mobility theme on their website and conferences. The domestic industry, especially future oriented suppliers such as Nissan, are hoping that the Olympics in 2020 and the showcasing of new technologies will put mobility on the agenda.