Didi drives into Japan, setting up head-on collision with Uber in world’s third-largest taxi market

Didi Chuxing, China’s largest ride-hailing platform, launches its online taxi-hailing service in Osaka on Thursday as it seeks to take a share of the world’s third-largest taxi market, setting up another battle with familiar rival Uber Technologies.

The service, a joint venture with SoftBank Corp, will see over 10 local partner taxi companies – including Daiichi Koutsu Sangyo, Japan’s largest taxi fleet operator – use Didi’s artificial intelligence-powered dispatch and fleet management system, the Beijing-based start-up said on Thursday.

Osaka, home to 8.83 million people and a popular destination in Japan for Chinese tourists, will become the largest overseas city that Didi operates in. San Francisco-based rival Uber launched a taxi-hailing app in Nagoya earlier this month, and Didi’s international expansion has also seen it face off against Uber in Mexico and Australia this year.

Japan is the world’s third-largest taxi market, where 240,000 licensed taxis transport 1.6 billion passengers annually with a gross merchandise volume of US$13.3 billion. However, the country is one of the few developed markets where ride sharing provided by non-professional drivers to paying customers remains illegal. SoftBank’s CEO Masayoshi Son has said Japan’s regulations stifle innovation, stating in July that a ride-hailing future is “inevitable”.

Taxi operators will be able to track hires and drivers using heat maps. Didi users from the Chinese mainland, Hong Kong and Taiwan will also be able to hail a taxi from their native app, with the aid of real-time text translation and bilingual customer support, in a move aimed at capturing a surge in demand from outbound Chinese tourists, according to the company.