Uber CEO Dara Khosrowshahi, in his first trip to Asia, made it clear that the ride-hailing company isn't about to scale back its business to just countries where it already has a strong market position
Tokyo: Uber Technologies Inc. isn’t ready to give up the world.
Dara Khosrowshahi, in his first trip to Asia since becoming chief executive officer, made it clear that the ride-hailing company isn’t about to scale back its business to just countries where it already has a strong market position. During his first stop in Japan, he said he’s willing to forge partnerships with taxi companies in order to succeed, even though Uber has less 1% market share and only offers limited services there.
“I saw Japan as an incredible opportunity, and when I asked the team why wasn’t our Japan business larger, I started learning the history of our approach to Japan, and it was an approach that frankly didn’t work," Khosrowshahi said in Tokyo on Tuesday. “It’s clear to me that we need to come in with partnership in mind, and in particular a partnership with the taxi industry here."
It’s the clearest sign yet that ride-hailing giant will redouble efforts to take a piece of Japan’s $16 billion taxi market, even amid signs of pressure from its biggest shareholder, SoftBank Group Corp., to focus on core markets. Amid heavy operating losses, Uber has retreated from some markets, including China and Russia. It’s also said to be considering a sale of its Southeast Asian business. After Japan, Khosrowshahi is scheduled to visit India, where Uber is competing against local ride-hailing startup Ola.
Last month, Rajeev Misra, a SoftBank executive joining Uber’s board, suggested in an interview with the Financial Times that Uber focus on core markets such as the US, Europe, Latin America and Australia. Khosrowshahi pushed back against that notion in an interview he gave at Davos, saying the company would be “leaning forward" to expand. Moreover, Uber is aiming to hold an initial public offering as soon as next year, making it even more important for the CEO to highlight potential areas of future growth.
While Khosrowshahi didn’t announce any specific deals during his visit to Japan, he made clear that Uber would make a renewed push to expand in the country. Although Uber has clashed with taxi rivals and regulators around the world, it has played by the rules in the archipelago, relegating its business to car hires and a ride-sharing program for the elderly in a small rural town.
Uber still faces an uphill battle in Japan. Local rivals such as Nihon Kotsu Co., Tokyo’s largest cab company, have already released popular taxi-hailing apps. Uber’s Chinese rival Didi Chuxing last year began partnership talks with taxi operator Daiichi Koutsu Sangyo Co., with the discussions facilitated by SoftBank, a person familiar with the matter told Bloomberg in October. Uber is also said to be in talks for a venture with Daiichi Koutsu.
And on Tuesday, just an hour before Khosrowshahi spoke, Sony Corp. unveiled an alliance with six taxi operators in Japan, which have a combined fleet of more than 10,000 cabs in the greater Tokyo area. Sony is aiming to develop a ride-hailing app powered by artificial intelligence and also provide payment services.
Uber’s CEO said Japan’s taxi utilization rate is 30%, while Uber’s is more than 50%. By combining Uber’s brand, technology, along with demand from tourists and partnerships with the taxi industry, he said the result would be a “win-win" for Uber and the taxi industry.
Khosrowshahi’s enthusiasm echoes comments from Uber’s Asia head Brooks Entwistle, who told Bloomberg this year that Japan will be a major focus for the company in 2018. That’s a turnaround from previous boss Travis Kalanick who largely left the country in the hands of a local manager.
Asked about SoftBank, which in January became Uber’s biggest investor, Khosrowshahi said the Japanese telecoms and investment company is “simply the smartest money in the transportation space."
“They have invested in many other ride-hailing and ride-sharing companies around the world, which has allowed them to be incredibly smart about what it takes to succeed," he said. “We’re very early in our relationship, but we’re already having very good dialogue, both about the Japanese market and the ecosystem that SoftBank has created."
Khosrowshahi said he wasn’t bothered by SoftBank’s announcement this month that it’s partnering with Didi to target ride-hailing in Japan. “If you’re going to do business with SoftBank, you have to get used to the way that they do business with your competition," he said. “And that’s OK." Bloomberg
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