Terrie's Take 960 - Uber Scores Small But Significant Victory in Taxi App Wars, ebiz News from Japan
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
- 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
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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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.
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- 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.
+++ UPCOMING EVENTS
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.
+++ TRAVEL DESTINATIONS PICKS
=> 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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+++ ABOUT US
Written by: Terrie Lloyd (terrie.lloyd at japaninc.com)
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