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China's Didi partners with SoftBank to launch taxi-hailing services in Japan

Jon Russell
China's Didi Chuxing is preparing yet another market expansion after it inked an agreement with SoftBank, Uber's largest shareholder, to introduce taxi-hailing services in Japan this year.

China's Didi Chuxing is preparing yet another market expansion after it inked an agreement with SoftBank, Uber's largest shareholder, to introduce taxi-hailing services in Japan this year.

Didi dominates the Chinese market -- thanks in no small amount to its acquisition of second-placed Uber China -- but this year it has expanded to Brazil via an acquisition and Taiwan via a franchise model, and also moved into bike-sharing and vehicle rentals. Didi has raised nearly $20 billion including a $4 billion round for global expansion which closed in December.

Right now, Didi and SoftBank say they are exploring opportunities. The two companies expect to launch a joint venture in Japan soon with plans to start pilot programs in Osaka, Kyoto, Fukuoka, Tokyo and other locations this year.

"Didi and SoftBank will diligently study local market conditions and policies, and will actively engage with industry practitioners, policymakers and other stakeholders, with the aim of building an open and inclusive platform that will be available to all of Japan’s taxi operators," the Chinese firm said in an announcement.

The focus is on taxi drivers and taxi operator firms because peer-to-peer ride services are not legal in Japan. Indeed, Uber works with licensed chauffeurs and licensed taxi drivers in Japan, but the U.S. firm hasn't cracked the market like it has in other countries.

Line, the messaging app company, has been the most successful new entrant with its Uber-like ride-hailing service, but Japanese taxi companies have adapted to the competition by bringing on-demand features their services, as the Financial Times recently reported.

The link between Uber and Didi brings another wrinkle to the complicated relationship between ride-sharing firms and their investors. SoftBank recently became Uber's largest shareholder after it completed a drawn-out $7.7 billion investment in Uber, which included a $1.1 billion direct investment, and yet it has also backed Didi via its Delta Fund, a $5 billion sister vehicle to its massive $100 billion Vision Fund.

Complications and conflicts are nothing new. SoftBank has backed Uber rivals Ola and Grab, and it even considered a stake in Lyft. Now, however, those relationships are moving into new levels of complication when SoftBank directly backs a new competitor in a market served by Uber.