China’s Didi Chuxing is close to launching a taxi-booking service in Japan

Days after raising $500 million via a strategic investment from travel giant Booking Holdings, Chinese ride-hailing giant Didi Chuxing has continued its international push with the launch of a local business in Japan.

Its new Japan-based unit is a joint venture with SoftBank, a longtime Didi investor, which has been in the works since an announcement back in February. Today’s news isn’t that the service is live yet — it isn’t — but rather than the JV has been formally launched.

Didi did say, however, that it plans to launch services for passengers, drivers and taxi operators in Osaka, Kyoto, Fukuoka, Tokyo and other major cities from autumn this year. Didi said that its users in China and Hong Kong will be able to use the soon-to-launch Japan service through their regular Didi app — that’s interesting since a ‘roaming’ strategy involving Lyft and others arranged years ago never came to fruition.

And yes, you did read correctly that taxi operators are part of the target audience. That’s because Japan doesn’t allow unlicensed private cars to operate as taxis.

That’s made the country a real challenge for Uber, which has held talks with taxi operators, and it also explains why one of the leading ride-hailing service in Japan — JapanTaxi — is backed by the taxi industry. JapanTaxi is even owned by an insider, Ichiro Kawanabe, who runs Japan’s largest taxi operator Nihon Kotsu and heads up the country’s taxi federation.

Working with taxi operators means Didi has a fleet management platform, as above, as part of its Japan-based service.

That concession on working with taxis doesn’t necessarily mean that Didi isn’t focused on widening the market by enabling “ride-sharing” with non-taxi drivers in the future.

Reuters reports that SoftBank supremo Masayoshi Son — one half of the Didi Japan joint venture — made some family scathing comments at an annual event.

“Ride-sharing is prohibited by law in Japan. I can’t believe there is still such a stupid country,” Son is said to have remarked.

Didi, of course, is playing things more cautious as it rides into Japan.

The company said that the country, which is the world’s third-largest market based on taxi ride revenue, “holds great potential as a market for online taxi-hailing.”

“There is earnest demand for more convenient urban and regional transportation services, especially in light of the growing population of senior citizens,” Didi added via a statement.

The Japanese expansion is another example of Didi’s push to internationalize its service beyond China in 2018. Last year, it raised $4 billion to double down on technology, AI and move into new markets, and this year it has come good on that promise by entering Mexico, Australia and Taiwan. While over in Brazil, it leaped into the market through the acquisition of local player and Uber rival 99.

The 99 deal was a particularly interesting one since Didi had previously backed the company via an investment. Didi didn’t say much about the mechanics of that strategy, but it has investments in ride-sharing companies worldwide, including Lyft, Grab, Ola, Careem and Taxify, which you’d imagine, like 99, could be converted into full-on acquisitions at some point in moves that would speed up that international expansion.

“Everyone is talking to everyone” — rideshare investor bypasses Uber-Careem rumor

Ride-hailing giant Uber is in talks over a possible merger with Middle East rival Careem, according to Bloomberg — citing three people familiar with the matter.

The report suggests various deal structures have been discussed, although it also says that no deal has been reached — nor may ever be reached, as discussions are ongoing and may not come to anything.

Bloomberg’s sources told it that Uber has said it would need to own more than half of the combined company, if not buy Careem outright.

Among the possible arrangements that have been discussed are for Careem’s current leaders to manage a new combined business, day to day, with potentially both brands being retained in local markets.

Another proposal would have Uber outright acquire Careem.

Bloomberg also reports that Dubai-based Careem is in talks with investors to raise $500 million, which it says could value the ride-hailing company at about $1.5BN. Careem is said to have held early talks with banks about a potential IPO in January.

Neither company has publicly confirmed any talks.

An Uber spokesman declined to comment when asked to confirm or deny talks with Careem.

While a Careem spokeswoman, Maha Abouelenein, told us: “We do not comment on rumors. Our focus remains to build the leading internet platform for the region, from the region. That means expanding to new markets and doubling down on our existing markets by adding new products and services to the platform. We are only getting started.”

Uber has been reconfiguring its global business for several years now, pulling out of South East Asia earlier this year after agreeing to sell its business to local rival Grab — while also taking a minority stake in the competitor.

And Uber did a similar exit deal with another rival — Didi — in China back in 2016.

Last year it also threw its lot in with Yandex.Taxi in Russia, with the pair combining efforts via a joint venture — albeit one which gave Yandex the majority share.

But Uber has been talking up its position and potential in the Middle East — with CEO Dara Khosrowshahi telling a conference in May that he believes it can be the “winning player” in the market, as well as in India and Africa, and vowing it would “control our own destiny” in those markets.

That does not necessary take a Careem-Uber deal off the table, of course, though the (public) claim from Uber is that it’s not willing to settle for a minority stake in the region, as it has elsewhere.

Responding in April to a question from CNBC about whether it might acquire Careem, Uber’s COO Barney Harford ruled out doing any more transactions for minority stakes, saying: “It would be crazy for us as a hypergrowth company to not engage in conversations about potential partnerships. But we’ve been very clear, the markets that we remain in today are core markets for us.”

Harford also claimed Uber was positioned to be able to invest in its chosen growth markets on “an indefinite basis”, thanks to having reached profitability in other markets. It’s also targeting 2019 for an IPO.

In March the Financial Times reported that Uber was in talks with Indian rival Ola over another possible merger — and the newspaper’s sources poured cold water on the notion of Uber taking a minority stake there too.

Of course Uber may not want to have to shrink its already retrenched global ambitions. But it may have to if it gets out-competed in its chosen plum markets.

Hence Careem’s chest-puffing talk about just getting started — provided it can convince its investors to screw their courage to the sticking place and stay on board for the ride.

Investors in Careem, which closed a $500M Series E round a year ago at a $1BN+ valuation, include Saudi-based VC Kingdom Holding, German automaker Daimler, and Japanese tech giant Rakuten — which reportedly led the Series E.

Oskar Mielczarek de la Miel, a managing partner at Rakuten Capital who leads on its mobility investments and is also a Careem board member, declined to comment on the rumors of Uber-Careem merger talks when we asked to chat.

But he was happy to talk up the broader opportunity that investors seen coming down the road for ridesharing, telling us: “If you look at the industry everyone is talking to everyone, and while consolidation is an obvious trend, it won’t be limited to the ridesharing players but draw other tech companies, OEMs and payment companies, to name a few.”

According to Careem’s website, the ride-hailing firm operates in 15 countries, mostly (but not only) across the Middle East, offering its services in around 80 cities in all.

While Uber’s website lists it being active in 15 cities in the Middle East and 15 in Africa.

China’s Didi Chuxing continues its international expansion with Australia launch

Didi Chuxing, China’s dominant ride-hailing company, is continuing its international expansion after it announced plans to launch in Australia this month.

The company — which bought Uber’s China business in 2016 — said it will begin serving customers in Melbourne from June 25 following a month-long trial period in Geelong, a neighboring city that’s 75km away. The business will be run by a Didi subsidiary in Australia and it plans to offer “a series of welcome packages to both drivers and riders” — aka discounts and promotions, no doubt. It began signing up drivers on June 1, the company added.

The Australia launch will again put Didi in direct competition with Uber, but that is becoming increasingly common, and also Ola and Didi which both count Didi as an investor — more on that below. This move follows forays into Taiwan, Mexico and Brazil this year as Didi has finally expanded beyond its China-based empire.

Didi raised $4 billion in December to develop AI, general technology and to fund international expansion and it has taken a variety of routes to doing the latter. This Australia launch is organic, with Didi developing its own team, while in Taiwan it has used a franchise model and it went into Brazil via acquisition, snapping up local Uber-rival 99 at a valuation of $1 billion.

It is also set to enter Japan where it has teamed up with investor SoftBank on a joint-venture.

“In 2018, Didi will continue to cultivate markets in Latin America, Australia and Japan. We are confident a combination of world-class transportation AI technology and deep local expertise will bring a better experience to overseas markets,” the company added in a statement.

This international expansion has also brought a new level of confusion since Didi has cultivated relationships with other ride-hailing companies across the world while also expanding its own presence internationally.

The Uber deal brought with it a stock swap — turning Didi and Uber from competitors into stakeholders — and the Chinese company has also backed Grab in Southeast Asia, Lyft in the U.S., Ola in India, Careem in the Middle East and — more recentlyTaxify, which is primarily focused on Europe and Africa.

In the case of Australia, Didi will come up against Uber, Ola — present in Melbourne, Perth and Sydney via an expansion made earlier this year — and Taxify, too. Uber vs Didi is to be expected — that’s a complicated relationship — but in taking on Ola (so soon after it came to Australia), Didi is competing directly with a company that it funded via an investment deal for the first time.

That might be a small insight into Didi’s relationship with Ola. Unlike Grab, which has seen Didi follow-on its investments, the Chinese firm sat out Ola’s most recent fundraising last year despite making an investment in the company back in 2015.

“The ride-hailing industry is still a young business, and the potential for growth is substantial. Competition exists in ride-hailing, like in any flourishing industry. But it leads to better products and services, which ultimately benefits users,” Didi told TechCrunch in a statement when asked about its new rivalry with Ola and Taxify.

That’s a similar sentiment to Taxify: “With a market the size of Australia, we think there is room for multiple players to operate and grow,” a spokesperson told TechCrunch.

Ola declined to comment.

The move into Australia comes at a time when Didi is under intense pressure following the death of a passenger uses its ‘Hitch’ service last month.

The company suspended the Hitch service — which allows groups people who are headed in the same direction together — and removed a number of features while limiting its operations to day-time only. This week, it said it would resume night-time rides but only for drivers picking up passengers of the same sex.