Monday, 15 October 2018

Masayoshi Son’s drive to fix Japan’s ‘stupid’ rules

Masayoshi Son’s drive to fix Japan’s ‘stupid’ rules
25 Jul

Masayoshi Son is famous for his epic clashes with authorities. But even for the outspoken chief executive of SoftBank, who once threatened to set himself on fire over internet access rights, it is extraordinary to blast Japan’s regulators as “stupid”.

Mr Son’s latest target is the country’s ban on car-booking services, whereby companies such as Uber are forbidden from allowing non-professional taxi drivers to transport passengers. The issue is close to his heart — the Japanese technology group, armed with the Saudi-backed $100bn Vision Fund, has made huge bets on the future of transportation through its stakes in Uber, China’s Didi Chuxing, India’s Ola and Singapore’s Grab. 

“Today ride-hailing is prohibited by law in Japan,” Mr Son said at a company event last week. “I can’t believe there is still such a stupid country. To protect the past, they are denying the future.” 

Mr Son was venting his frustration just hours before Didi announced plans to launch a taxi-booking platform with SoftBank in Japan this year, using its artificial intelligence technology to forecast passenger demand. 

Stephen Zhu, the Didi vice-president who will head the joint venture, was more deferential than Mr Son, promising to be “a friend to the taxi community” and respect Japanese regulations and customs. In order to provide an easier-to-manage service for the country’s ageing drivers, Mr Zhu noted that Didi’s app would be offered on larger-display tablet devices rather than on smartphones, which are used in all other markets.

Car-booking companies such as Didi and Uber have little choice but to partner with local taxi companies in Japan, because of the ban on using non-professional drivers. Still, SoftBank’s backing for the new venture has caused a stir within the Japanese taxi industry, which has lobbied hard against the likes of Uber and Didi. 

Breaking with the establishment and winning over consumers through aggressive marketing, convenience and low cost is a typical strategy employed by Mr Son to upend the dominance of traditional players. That was how he transformed SoftBank into the country’s third-largest mobile carrier. 

The hope among investors is that Mr Son’s clout will extend beyond the car-booking market to other parts of Japan’s sharing economy. SoftBank and its Vision Fund are already invested in shared office provider WeWork, and the two have launched a joint venture in the country. According to the Yano Research Institute, Japan’s market for sharing services is expected to expand nearly three-fold from fiscal 2015 to ¥107bn ($963m) by fiscal 2021. 

Still, Airbnb has also faced a setback in Japan despite expectations for fast growth to meet tourist demand linked to the 2020 Tokyo Olympics. The number of listings on the platform recently plummeted ahead of a new law on private home-sharing that came into force in June requiring hosts to obtain a permit from authorities. 

New regulatory hurdles are not unique to Japan. But surveys show that the country’s consumers have starkly low exposure to sharing services compared with elsewhere, creating less bottom-up pressure to relax the rules. 

The percentage of people who actually use sharing services in goods, space and skills hovered in the 3 per cent range in Japan compared with more than 10 per cent in the UK and more than 25 per cent in the US, according to Japanese government data. 

Even among millennials, only 6.8 per cent have used sharing services for transportation, according to a recent survey conducted by online banking provider Japan Net Bank. The need for such services has been less dire with Japanese taxis being readily available, safe and on time. 

Yet the opportunity is clear for Mr Son. Even if the quality of Japanese taxi drivers is currently high, efficiency can be boosted with the use of technology to analyse both driver and passenger behaviour. 

A platform such as a ride-sharing app gives SoftBank troves of data that it can use to compete in the era of the internet of things and self-driving vehicles. And this is why Japan needs to move faster to embrace these new services. 

If Toyota and other Japanese carmakers are to survive an age in which Mr Son predicts cars will become a commodity, they need to be armed with driver data to provide transportation services for consumers who may not own vehicles. To do that, they should partner with Uber and other technology groups in their home market as well and convince the taxi industry to come on board.



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