Business

U.S. ride-hailing provider Lyft considers offering services in Japan

by Alex Martin

Staff Writer

U.S. ride-hailing firm Lyft Inc. is considering providing its services in Japan, a market where rival Uber Technologies Inc. has so far seen limited success due to regulatory hurdles.

“We would love to be in Japan, and we also will be looking at that possibility,” John Zimmer, co-founder and president of the San Francisco-based company, said Wednesday when asked about prospects for the firm entering Japan.

Speaking at the New Economy Summit 2018 in Tokyo, Zimmer said any move into Japan would involve coordinating with the nation’s regulatory structure and would likely involve finding a local partner.

“I think the regulatory framework here will play an even larger role than it likely had in other regions,” he said. Zimmer did not elaborate on when or how Lyft may enter the Japanese market.

Unlike Uber, which operates in dozens of countries, Lyft had until recently stayed in its home market. That changed in December when it began offering its services in Toronto, opening up the possibility of further international expansion.

Taxis in Japan are known for their clean interiors and quality service, but they are also known for their expensive fares — partially a result of tough regulations that have protected the industry and kept out new competitors like Uber. The company’s main car-hailing service isn’t permitted in Japan, where such unlicensed services are banned. The firm has a limited presence in the country with a taxi-hailing service in Tokyo, which is basically a dispatch service using already established fleet operators, and its Uber Eats food delivery service.

Taxi companies have also remained wary of the potential disruption services like Uber could bring to Japan’s market if the firm were to make a full entry, and they have been devising ways to make their own services more accessible and cheaper by introducing new services like cab-sharing apps.

Their concerns are not unfounded. Pricey fares and changing consumer habits have seen the number of taxi users decline over the years. Figures from the Japan Federation of Hire-Taxi Associations shows that the number of taxi passengers in 2014 was 1.56 billion compared to 2.24 billion in 2004 — a 30 percent decline.

Zimmer said the market in Japan operated on different needs compared to others.

“There is a focus in this culture on hospitality … in other cultures with taxi services, we were providing competition to something customers weren’t happy with,” he said.

The expensive fees, however, could provide the company with an edge.

“I think there could be even greater cost competition to help save people money,” he said.

Both Lyft and Uber are backed by major Japanese technology companies. E-commerce giant Rakuten Inc. led a $530 million (¥56.7 billion) round in Lyft in 2015 and its founder and CEO Hiroshi Mikitani is a Lyft board member. Mikitani is also the representative director of the Japan Association of New Economy, the group that hosted Wednesday’s event.

Tech mogul Masayoshi Son’s SoftBank Group Corp. is Uber’s largest shareholder.

With the 2020 Tokyo Olympic and Paralympic Games approaching, new players like Uber are stepping up efforts to grow their presence in Japan.

The nation attracted a record 28.69 million tourists in 2017, up 19.3 percent from the previous year. The government wants to see that figure reach 40 million by 2020.

Uber CEO Dara Khosrowshahi made his first visit to Japan in February since taking over at the firm. On his Twitter feed he mentioned “promising partnership talks with Taxi groups,” followed by a picture of him with Prime Minister Shinzo Abe. “An honor to show Prime Minister @AbeShinzo a map of Japan with all the places where people have requested a ride from the #Uber App.,” he tweeted.

Zimmer emphasized the need to work with regulators to break into Japan.

“In the U.S.,it was very local. It wasn’t like we could go talk to the federal government because they didn’t have jurisdiction over a city or state that was regulating transportation,” he said.

“Here, I would say it is essential, and it’s the reason why it played out how it is today. That would be how we would approach Japan.”