TT-960 -- Uber Scores Small But Significant Victory in Taxi App Wars, ebiz News from Japan

* * * * * * * * 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.
(http://www.terrielloyd.com)

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/

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

The www.japantravel.bike One-Day Rental Cycle Pass service is now offered on more than 6,000 power-assisted bicycles all over Tokyo, and 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
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+++ 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)

http://bit.ly/2MeJp7y

=> 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)

https://on.wsj.com/2wV8kZ0

=> 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, 2018)

https://reut.rs/2QhKEWX

=> 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)

http://bit.ly/2wV80cK

=> 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)

http://bit.ly/2N3vIOn

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.

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+++ UPCOMING EVENTS

No upcoming events this week.

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+++ CORRECTIONS/FEEDBACK

=> 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 experience.

*** 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.

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+++ 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 everything.

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!

https://en.japantravel.com/tokyo/architecture-of-studio-ghibli/15081

=> 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

https://en.japantravel.com/event/lantern-festival-in-nozawa-onsen/46412
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Written by: Terrie Lloyd (terrie.lloyd@japaninc.com)

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