China-based Didi Chuxing and Japanese tech giant SoftBank Group will be rolling out a new venture later this year in Japan providing ride-hailing services, amidst a worldwide battle to control technology that is becoming more central to urban transportation.
The entry into Japan underlines a recent Didi push to increase its presence outside China though it does face big challenges in expanding services it offers in a country where lobbying is taking place by taxi companies against any deregulation.
In Japan, companies that specialize in ride-hailing face very strict rules that in effect bar drivers that are non-professional from offering any taxi services due to safety, and can only provide services which match users to existing fleets of taxis via a mobile platform.
The two companies said through a prepared statement that they will trial matching services for Japan in 2018. SoftBank has invested in Didi, which was able to raise more than $4 billion for its global push last December at a valuation that exceeds $50 billion.
Uber and Didi, which are tech-based along with traditional makers of cars, are looking to get a leg up in the arena of ride-hailing, amidst a shift globally towards electric vehicles, autonomous driving and car sharing.
Didi has expanded rapidly overseas the last year since ensuring its dominance in China after purchasing the local unit of Uber in 2016 that ended a battle with the U.S. company that cost Uber close to $2 billion.
The Chinese company is facing more challenges in China, including a slowdown in growth, more rivals that have entered the market, and drivers that complain reduced subsidies result in longer hours and less pay.
Last month, Didi announced it would take a controlling interest in 99 based in Brazil, in an agreement that sources said put a value on 99 of more than $1 billion and gave a significant majority share to Didi in the Brazilian based company.
Didi also wants to enter Mexico, while expanding presence in areas outside the mainland of China such as Taiwan and Hong Kong.
One analyst in Hong Kong said that in one year, if you are an outbound traveler from China, everywhere you travel you will have Didi as an option for finding a ride and that is helpful to them in securing an existing customer base.
SoftBank has shares of Didi, Ola, which is based in India, and Grab in Southeast Asia. Last month the company, based in Japan, became the largest Uber shareholder.