Terrie's Take 960 - Uber Scores Small But Significant Victory in Taxi App Wars, ebiz News from Japan

Terrie's Take terrie at mailman.japaninc.com
Mon Sep 10 10:01:15 JST 2018

* * * * * * * * TERRIE'S TAKE - BY TERRIE LLOYD * * * * * *
A weekly roundup of news & information from Terrie Lloyd, a long-term 
technology and media entrepreneur living in Japan.

General Edition Sunday, Sep 09, 2018, Issue No. 960

- What's New -- Uber Scores Small But Significant Victory in Taxi App Wars
- News -- Space elevator taking first step to reality?
- Upcoming Events
- Corrections/Feedback - Why nightlife in Kyoto sucks
- Travel Picks -- Studio Ghibli architecture in Tokyo, Lantern Festival 
in Nozawa
- News Credits

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+++ WHAT'S NEW - Uber Scores Small But Significant Victory in Taxi App Wars

Last week, Uber Japan pulled off a bit of a coup, by announcing 
completely unexpectedly that it was teaming up with Fuji Taxi of Nagoya 
and launching the Uber taxi app with Fuji. The service will begin with 
350 cabs and is likely to eventually cover all 550 vehicles in due 
course. To be sure, this is not your mom's Uber service in the USA and 
elsewhere, with independent drivers and cars, but it is significant 
because it takes Uber from being a virtually non-existent operator of 
cabs to being a high-profile software company that collaborates with 
taxi firms.

And in Japan, that could well be a winning strategy.

Uber seems to have been able to pull off this rather high-profile deal 
thanks to some quick thinking by its Japan team and a very fortunate 
turn of events earlier this year. Back in February, Nihon Kotsu, Japan's 
largest cab company, with about 5,000 vehicles of its own and through 
affiliates, (not counting the numerous other company affiliations it has 
throughout Japan) launched a "ride sharing" service whereby patrons late 
at night headed in the same direction could share cabs and split the costs.

[Article continues below...]

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[...Article continues]

The service was less popular than it should have been, but it received a 
ton of publicity when several major Japanese media firms tried to use 
the app and found that it was difficult to hail late-night cabs that 
were headed the same way. There were also plenty of negative reviews for 
the same reason on Google's Play store. All the publicity, plus the fact 
that Nihon Kotsu's new service offered potentially cheaper rates, which 
was a breakthrough business idea, PLUS the lineup of heavy-hitting 
investors in the taxi giant's related apps maker, added up to seriously 
rattle Nihon Kotsu's competitors, and in our opinion kicked off a 
competitive race that has only just begun. Now many of those competitors 
are reaching out to the likes of Uber, Sony, and China's Didi Chuxing 
for help to fight back.

In fact, the Nihon Kotsu software affiliate, Japan Taxi Co., has been 
working on a taxi app since its foundation in 2011, when the 
family-owned firm's charismatic US-educated scion and CEO, Ichiro 
Kawanabe, decided that despite government regulations, Uber was too much 
of a risk to leave unchecked. He had been running the actual taxi 
company itself, but decided in 2017 to appoint a hired President and 
moved pretty much full time into the apps company. Kawanabe is obviously 
a smart guy and has done a great job of lining up big collaborators and 
investors, such as: bringing in Toyota for JPY500m in 2017, raising 
JPY7bn from a variety of investors in February, 2018, landing NTT DoCoMo 
for JPY2.25bn just a couple of months ago, and now receiving JPY1.5bn 
from Kakao Mobility of S. Korea.

But back to Uber Japan.

With the Nagoya operator now in its camp, Uber has to move quickly to 
secure other operators around Japan in order to stay relevant in the 
marketplace. The competing JapanTaxi app now runs on about 60,000 
vehicles around the country, about a third of the nation's entire fleet, 
and with Didi Chuxing gaining tie-ups through its US$5bn investee 
relationship with Softbank, the window of opportunity is closing fast. 
Didi Chuxing says it will launch in Tokyo and Osaka as soon as November.

The media has reported that Uber is talking to Fukuoka's largest taxi 
operator, and probably there are many others in the pipeline. The issue 
is whether the company can compete with all the insider relationships 
that inevitably come from the competitor camps. This is where Uber, like 
Airbnb, should not underestimate the Old Boys networks in Japan. Many of 
these CEOs of major companies have been socializing for decades, often 
having gone to the same schools, and certainly having helped each other 
out in various ways during that time. These types of human relationships 
are critical for getting things done, and the networking not only has to 
be senior, it has to be personal. If Uber has such a "fixer" then we 
rate their chances of success in Japan as being better than average. But 
if like Airbnb they are using an unconnected younger professional, then 
their chances will be lower than average.

The Japanese taxi sector is one of the world's largest, with a combined 
revenue of about JPY1.7trn (US$15.3bn), so this is a market that Uber 
really needs to win, to validate its strategy and create a foundation 
for future growth. For the time being at least, Uber can enjoy one small 
victory with their Fuji tie-up: it is now well on the way to exceeding 
the 1% of the taxi market that Nihon Kotsu vowed several years ago to 
restrict the US firm to.

...The information janitors/


--- Japantravel.bike fully operational - rent one today ---

The www.japantravel.bike One-Day Rental Cycle Pass service is now 
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500 in Osaka and Nara. The service is developed on top of the DOCOMO 
BIKESHARE bicycle rental platform, and offers an updated smartphone 
interface, which provides international tourists easy access, a fast 
payment system, and multilingual customer support. Passes start at a 
flat rate of JPY 1,500 plus consumption tax for a basic rental at the 
bike port (more for pre-bookings), and renters can use the bicycle or 
any replacement, for up to 24 hours (from 00:01 to 23:59 each day). 580+ 
bicycle ports across the three cities allow convenient rental and return 
to any port within the area.

JapanTravel.Bike is coming soon to other major cities in Japan.

To rent one: www.japantravel.bike

+++ NEWS

- Space elevator taking first step to reality?
- Aegus missiles to cost US$2.1bn
- LINE moving into finance business
- Wage rise trickle starts
- Trump remarks rattle Japanese stock market

=> Space elevator taking first step to reality?

It's a long way between here (on the ground) and the Thermosphere of the 
earth, and not many people have taken the original idea from Japan of 
building a "space elevator" to resupply space stations seriously. 
Nonetheless, a pair of experimental satellites about to be launched next 
week for Shizuoka University seem to mark the beginning of the journey 
to prove a space elevator viable. The two 10cm satellites will be 
released by the launch vehicle and unfold to become connected by a 10m 
steel cable, upon which a miniature vehicle will traverse. The vehicle's 
progress and behavior will be recorded by video devices on each 
satellite. ***Ed: In the reference article, interesting to see 
scientists put an actual number on the cost of a space elevator - of 
JPY10trn. More interesting still to see that this is cheaper than what 
is being spent on the Tokyo-Nagoya maglev train...**  (Source: TT 
commentary from www.space.com, Sep 07, 2018)


=> Aegus missiles to cost US$2.1bn

The Japanese government appears to be offering Trump a sop by announcing 
that the Self Defence Force (SDF) will beef up its missile defenses with 
an additional (third) layer of missiles, to be purchased from the USA 
for US$2.1bn. This will boost the defense agency's spending with US 
military suppliers to about JPY650bn and the SDF's overall spending will 
jump to around JPY5trn this fiscal year. ***Ed: Maybe Tokyo is right to 
think that they can drop a bit of cash for Trump to crow about...? We'll 
see. In the meantime, good to see wsj.com crediting a quote to Lance 
Gatling - our very own locally-based foreign military expert.** (Source: 
TT commentary from wsj.com, Aug 31, 2018)


=> LINE moving into finance business

LINE has announced it is issuing JPY148bn worth of convertible bonds, so 
as to raise money for its new financial business segment. The company 
has 164m active users, mostly in Japan, but with some in Taiwan, 
Thailand, and Indonesia, and the company is beefing up its LINE Pay 
business, which allows users to transfer money to each other. Apparently 
the payment system is a big hit and users have sent JPY195bn to each 
other over the last 3 months alone. ***Ed: Clearly LINE and other SNS 
operators have learned from Rakuten, which is paying for all of its 
other experiments and failed M&As through profits from its financial 
services operations.** (Source: TT commentary from reuters.com, Sep 04, 


=> Wage rise trickle starts

Although the government's Internal Affairs and Communications Ministry 
is saying that the economy is still flat and that household spending was 
up just 0.1% YOY, in fact, there are signs that a general rise in wages 
may be ahead. According to the ministry, the average household enjoyed 
an increase in summer bonuses, and this has led to a mini boom in 
automobile upgrades. Apparently in July domestic auto purchases jumped 
54%. ***Ed: In oh-so-cautious Japan, any pay increases are typically 
restrained to the semi-annual bonuses first, since these can be adjusted 
back down again if there are economic headwinds, THEN to salaries of 
full-time workers, then finally to salaries of part-time workers - who 
are the last in line.** (Source: TT commentary from the-japan-news.com, 
Sep 08, 2018)


=> Trump remarks rattle Japanese stock market

...Yes, well those local pay rises may be short-lived, no thanks to 
Trump turning his sights to Japan as his next trade war target. A Wall 
Street Journal report said that Trump is expecting conflict with Japan 
over their trade imbalance. Leading the stock tumble were IC chip 
producers, followed by auto makers, then retailers. (Source: TT 
commentary from japantimes.co.jp, Sep 07, 2018)


NOTE: Broken links
Some online news sources remove their articles after just a few days of 
posting them, thus breaking our links -- we apologize for the inconvenience.



No upcoming events this week.



=> In TT-942, we ran a news commentary about Japan's nightlife tourist 
options missing the mark. A reader came back with some first-hand 

*** Reader's feedback:

A bit of feedback from my experience in Kyoto with the tourism industry 
and small businesses including nightlife.

Tourism is up but it's not doing much at all for the nightlife industry 
such as bars, pubs, clubs, late-night eats, etc. The biggest chunk of 
the increase is from East Asia and Southeast Asia. Take Chinese tourists 
for example. They typically travel in big groups and/or with family. 
They visit the famous places, shop, dine, and then go straight back to 
the hotel. Zero gains for the nightlife industry. But it does boost 
sales at the combini next to the hotel.

While Western tourists do go out, but it's generally limited to the more 
adventurous types or those being guided by locals. A lot of people would 
like to experience the nightlife but don't know where to go and can't 
read anything. Too many obstacles.

"Hey look! An Irish pub. I know what that is. Check it out, English 
menu! Great. I guess I'll have a Guinness." This classic scenario misses 
the unique experiences you can have at a Japanese bar unless you are 
lucky enough to meet a friendly local at the pub who will kick on with 
you and help you navigate the local nightlife. BTW, I have a friend in 
Kyoto who's small tour company offers nightlife tours. (www.kyotofun.com)

As was pointed out, public transport is also a big issue. It shuts down 
too early. This limits your transport options if you want to stay out 
without taking an expensive cab ride home, walking in an unfamiliar 
city, or illegally riding your bike after drinks (even if you could find 
legal bike parking to begin with). Heck, even in Shibuya the last bus to 
some suburbs is 10pm (my bus from Shibuya stopped at 9:45pm). I 
sometimes wonder if some almighty taxi industry lobbyists aren't behind 
the early shutdown times?! I often hear western tourists complaining 
about this situation.

Westerners are indeed fascinated by the exotic services offered in 
Japan, but the night-life industry is just not open to non-Japanese. 
Language barrier, cultural barrier, safety concerns, etc. Unfortunately, 
I don't see that changing any time soon.



=> The Architecture of Studio Ghibli, Tokyo
A glimpse into the homes of your favorite characters

In honor of the release of the film "When Marnie Was There", the 
Edo-Tokyo Open-Air Architectural Museum has curated a retrospective of 
the elaborate and intricately detailed architectures and interiors from 
Ghibli Studio's fictional universe. Everything from extensive scaled 
models to blueprints and sketches from films dating back to the early 
80's will be showcased from now until December 14th. Perhaps one of my 
favorite Ghibli Studio exhibits to date, it is exceptionally thorough 
and thoughtful, so expect to spend at least 30-60 minutes to digest 

One of the central large-scale pieces on display was Satsuki and Mei's 
home from the feature "My Neighbor Totoro". Towering over this model, 
you have cross-generational fans from all walks of life passionately 
debating over which doorway Totoro first appeared on screen. In many 
ways Miyazaki's vision of Japan is deeply woven into the fabric of the 
country's national identity. The films deeply touched people's hearts 
and captured their imagination. Ghibli fanatics enamored by the studio's 
work over last four decades will not want to miss this!


=> Lantern Festival in Nozawa Onsen
Experience a unique mountain escape

Festivals are something that Nozawa Onsen village does well and while 
January's Fire Festival may get all the hype due to it coinciding with 
plenty of powder snow, September's Lantern Festival is a local favorite 
and a great chance to explore Nagano in early Autumn. The festival 
features a parade through the village featuring drums, flute players, 
dancing, and an age-old Japanese folk pantomime.

The festival took place this last weekend, but for future reference 
always occurs on September 8th and 9th.
Venue: Nozawa Onsen
When: Sep 8th - Sep 9th 2019,  9:00am - 11:00pm



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Written by: Terrie Lloyd (terrie.lloyd at japaninc.com)

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