Didi Chuxing and SoftBank come together to rival Uber in Japan

The global ridesharing market has some truly strange bedfellows. The high volume of investments and competitors in the sector makes for some very complicated relationships and connections. For example, SoftBank recently became the largest single shareholder in Uber through a $7.7 billion investment, which included a $1.1 billion direct investment. At the same time, the mega-investor also backs Uber’s largest rival in Asia – Didi Chuxing – through its Delta Fund, the $5 billion companion investment vehicle to the mammoth $100 billion Vision Fund. Didi is also an Uber shareholder through equity acquired after its purchase of Uber China. Also, let’s not forget that SoftBank has also invested in Uber rivals Ola and Grab, besides considering an investment in Lyft. It’s enough to make your head spin.

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Now, things are set to get even more complicated. SoftBank and Didi have announced that they have established an agreement to introduce taxi-hailing services in Japan – services that will compete directly with Uber. In an announcement, Didi said, “Didi and SoftBank will diligently study local market conditions and policies, and will actively 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.” The two companies aim to launch an initial joint venture with pilot projects in Osaka, Kyoto, Fukuoka, Tokyo, and other locations by the end of the year.

Japan is a unique market for ridesharing services as peer-to-peer ride services are actually illegal in the country. Hence, firms tend to focus on establishing partnerships with licensed taxi firms and their drivers, such as Uber’s association with licensed chauffeurs and taxi drivers in the country for its services. The new Didi and SoftBank service is expected to follow a similar operating pattern.

Despite the unique working environment, interest in Japan’s ridesharing market is booming. Car manufacturer Toyota also announced today that it would be investing ¥7.5 billion – US$68 million – in taxi firm Nihon Kotsu’s tech and R&D divisions to help it build an on-demand taxi-hailing service. Another major player in the arena is messaging app Line, which has seen success with a taxi-hailing service similar to Uber. Not to be outdone, Japanese taxi companies have also improved their offerings to stay competitive with new on-demand features and services.

Elsewhere, ridesharing services are rapidly expanding into new markets. There is intense speculation about Ola’s expansion into international markets including New Zealand and Australia. At the start of 2018, Didi announced its arrival in Brazil through the acquisition of 99, and have even expanded into bike-sharing and vehicle rental verticals. Last year, the company also entered Europe and Africa by investing in Uber rival Taxify.

As SoftBank and Didi work towards setting up a direct rival to Uber in Japan, and competition heats up globally, we will likely see more cross-connections as investors and competitors vie for customers. It’s a complicated ridesharing world, and things are only going to get messier.