New Uber CEO Dara Khosrowshahi (Drew Angerer, AFP)
Tokyo - Uber wants to forge partnerships with taxi companies
in Japan because its go-it-alone approach in the country wasn’t working, chief executive officer
Dara Khosrowshahi said in Tokyo on Tuesday.
Japan’s taxi market can become more efficient, even though its
services are already of a high quality, he said at an event with former
US ambassador to Japan
John Roos. While Khosrowshahi didn’t announce any specific deals, he
made clear that Uber would make a renewed push to expand in Japan.
It’s the clearest sign yet the ride-hailing giant will redouble
efforts to take a piece of Japan’s $16bn taxi market.
heavy operating losses in the US and a retreat from international
markets - Uber has ceded
Russia and is said to be
considering a sale of its Southeast Asian business - Japan has the
potential to offer a rare bright spot for a company headed for a public
listing next year.
“It’s clear to me that we need to come in with partnership in mind,
and in particular a partnership with the taxi industry here, which
actually has a very, very strong product,” said Khosrowshahi, who is
making his first trip to Asia as Uber’s CEO. “But that product hasn’t
kept up with technological change.”
While Uber has clashed with taxi rivals and regulators around the
world, it has played by the rules in the archipelago, relegating its
business to car hires and a ride-sharing programme for the elderly in a
small rural town. The company’s main success in Japan has been
food-delivery service UberEATS, which Khosrowshahi said made him realise
the country’s potential.
“I saw Japan as an incredible opportunity, and when I asked the team
why wasn’t our Japan business larger, I started learning the history of
our approach to Japan, and it was an approach that frankly didn’t work,”
Khosrowshahi said. He was speaking with Roos, a co-founding partner at
Geodesic Capital, an Uber investor.
Uber still faces an uphill battle in Japan. Local rivals such as
Nihon Kotsu, Tokyo’s largest cab company, have already
released popular taxi-hailing apps. Uber’s Chinese rival Didi Chuxing
last year began partnership talks with taxi operator Daiichi Koutsu
Sangyo, with the discussions
facilitated by Uber shareholder SoftBank Group, a person familiar
with the matter told Bloomberg in October.
Uber is also said to be in
talks for a venture with Daiichi Koutsu.
And on Tuesday, just an hour before Khosrowshahi spoke, Sony unveiled an
alliance with six taxi operators in Japan, which have a combined fleet
of more than 10 000 cabs in the greater Tokyo area. Sony is aiming to
develop a ride-hailing app powered by artificial intelligence and also
provide a payment services.
Uber’s CEO said Japan’s taxi utilisation rate is 30%, while
Uber’s is more than 50%. By combining Uber’s brand, technology,
along with demand from tourists and partnerships with the taxi industry,
he said the result would be a “win-win” for Uber and the taxi industry.
Khosrowshahi’s enthusiasm echoes comments from Uber’s Asia head
Brooks Entwistle, who told Bloomberg this year that Japan will be a
major focus for the company in 2018. That’s a turnaround from previous
Travis Kalanick who largely left the country in the hands of a country
manager. But Uber saw four listless years in Japan, achieving less than 1% of monthly rides in Tokyo.
Asked about SoftBank, which in January became Uber’s
biggest investor, Khosrowshahi said the Japanese telecoms and investment
company is “simply the smartest money in the transportation space.”
“They have invested in many other ride-hailing and ride-sharing
companies around the world, which has allowed them to be incredibly
smart about what it takes to succeed,” he said. “We’re very early in our
relationship, but we’re already having very good dialog, both about the
Japanese market and the ecosystem that SoftBank has created.”
Khosrowshahi said he wasn’t bothered by SoftBank’s announcement this
month that it’s partnering with Didi to target ride-hailing in
Japan. “If you’re going to do business with SoftBank, you have to get
used to that they do business with your competition,” he said. “And