Tokyo — Uber may be shredding business models for taxi companies the world over, but it is struggling to make inroads in Japan, where risk-averse passengers prefer to stick to their high-quality traditional taxi service.
Japan, with its wealthy customer base and megacities such as Tokyo, should present rich pickings for Uber.
In 2015, the national market for taxis had a turnover of ¥1.73-trillion (R199bn), according to transport ministry data. There are 50,000 taxis in Tokyo alone — instantly recognisable with their polished exteriors and doors that open automatically to let customers board effortlessly.
And with hailing a taxi rarely taking more than a few seconds in the major cities, there has been sluggish take-up of Uber.
"Japanese people don’t like taking risks, they are risk averse. They are quite strict when it comes to the quality of service," said Ichiro Kawanabe, CEO of Nihon Kotsu, the main Tokyo taxi company.
Given this, "when Uber tried to messily enter the market, no one wanted them", said Kawanabe, who is also chairman of the Japanese taxi federation.
Uber also ran up against local legislation — it is forbidden to operate a taxi without a licence.
So it tried to enter the Japanese market via another route, setting up a pilot car-sharing service in 2015 in the city of Fukuoka. Uber said it was a study of the needs of the local community but authorities quickly slammed on the brakes, saying it could be considered an unlicensed taxi service and raising questions of safety.
Kawanabe also pointed to safety issues as among the reasons for Uber not enjoying the same success in Japan as it had elsewhere. "When an accident happens, they don’t take responsibility and say they are just a platform provider. Japan cannot accept this."
An Uber spokesman said the company’s priority in Japan was to "partner with taxi companies to get licensed drivers using the app to connect with riders". Uber has started another pilot system in two rural towns connecting senior citizens with people willing to drive them around. This time the authorities have not clamped down, as it compensates for a lack of public transport and taxis.
Kawanabe admitted that Uber had been useful in foisting change on the conservative Japanese taxi industry.
About nine out of every 10 taxi rides in Tokyo was hailed or taken from a rank, with only 10% ordered via smartphone, said Kawanabe. The main reason for this was that fewer than half of the taxis in Tokyo were connected to smartphones.
"It’s very difficult for us and app operators to convince them to use apps," he complained.
This conservatism, combined with excellent public transport systems, led to the number of taxi passengers falling by a third from 2005 to 2015, according to the transport ministry. The industry is just starting to fight back — dropping fares for short rides around Tokyo, for example.
"It took me two years to convince them [to reduce fares] … and there is still so much that needs to be done," said Kawanabe. He has set up a start-up subsidiary, JapanTaxi, to develop apps to connect drivers with passengers and aims to launch a carsharing app in 2018.
But the competition is ferocious. On the app front, Chinese developer Didi Chuxing is expecting to launch in Tokyo in 2018, in partnership with a rival taxi firm.
And Uber is hoping for a large investment from the Japanese communications group Softbank.
AFP
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