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Audio Japan 〜Learning Japan with You〜 This podcast is to dive into Japanese culture,
trends, and some niche information. If you want to listen to it in Japanese,
please go to the podcast. Audio Japan 〜あなたと一緒に日本を学ぶ〜
I broadcast on platforms like Spotify, YouTube, Apple Podcast, and so on.
My name is Taiki Arai, an educational designer.
As mentioned at the end of the last episode, I'll be broadcasting twice a week starting in February.
One of those times will focus on the current affair in Japan.
At the time of this episode, it might seem apt to talk about the World Cup,
but today's topic is something that will come up in a few months.
Have you ever heard of the term Ride-Sharing? Ride-Sharing has been gradually trending up
on Google Trends since August 2023, peaking at a popularity score of 100 during the week of
October 22nd to 28th. Since entering 2024, it has stabilized around 30,
and I predict it will rise again in April. This is because Ride-Sharing already implemented
abroad will be partially legalized in Japan this April.
So, this episode will delve into Ride-Sharing. In the first half, I'll discuss the overview
of Ride-Sharing abroad and the Japanese version of Ride-Sharing.
In the second half, I'll shift perspectives and discuss why Uber's Ride-Sharing couldn't be
introduced in Japan. Let's get started.
Ride-Sharing is a service where ordinary people use their personal cars to transport passengers
for a fee. Many G20 countries have adopted it under appropriate regulations, with some
countries implementing it as early as 2010. There are two types of Ride-Sharing, TNC type
and PHV type. TNC means Transportation Network Company,
positions platform operators as TNCs and mandates driver and operation management by TNCs.
To break it down, the well-known company Uber Eats parent company Uber acts as the management
company signing individual contracts with private drivers. It matches registered drivers and riders
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through a smartphone app, intermediating rides, payments, and administrative management.
TNC type is adopted in the USA, Canada, Brazil, India, and so on.
On a side note, am I the only one who confuses Uber with a six-member band, Uber World in Japan?
Probably because I listen to the rock band songs nearly every day from my late teens to early 20s.
PHV type means Private Prior Vehicle. It's similar to a form of private taxi.
The government mandates each driver for vehicle and operation management. PHV type is adopted
in the UK, France, China, Australia, and so on. Abroad, platforms like Uber, Lyft, and
Grab are expanding their transportation networks.
Looking at some metrics, Uber had 19.7 million active users monthly, and the global ride-sharing
market is estimated to be $47.62 billion in 2024, expected to reach $86.99 billion by 2029.
Considering this, ride-sharing seems to have integrated into daily life abroad. Even a
third-grade elementary student uses ride-sharing to go to extracurricular activities as easily
as taking a train. The benefits of ride-sharing include for users the ability to select departure
and destination service type on the app, and know the driver information, estimated arrival time
to the pickup location, and the fare from departure to destination beforehand.
After the ride, drivers can be rated, adding a layer of risk assurance.
From the driver's perspective, it's possible to work with their car on holidays or after
their regular job. In the USA, dynamic pricing adjusts prices based on demand and time,
making drivers who are familiar with local routes around tourist spots particularly
valuable since they can transport more people quickly.
Imagine it, Kankichi Ryotsu from Kochikame seems like he would make the most with reviews like,
Though the driver was reckless, it was the fastest I've reached my destination.
When I mentioned where I was touring, he suggested additional places to visit.
I ended up tipping on top of the fare. Makes me wanna watch Kochikame again
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after such a long time. Now, moving on to ride-sharing in Japan.
Japanese ride-sharing has different mechanisms than TNC or PHV.
Instead of TNC-type services like Uber, taxi companies use their own apps for operational
management, limiting service to areas or times with several car shortages.
It's very Japanese to proceed with unique rules.
GO is one company supporting taxi companies for ride assistance. Uber and Didi's Japanese
entities like GO can only support taxi companies currently.
With a partial legalization in April, there's a possibility for new platformers to enter by June.
Japan has been critical of ride-sharing compared to other countries,
mainly due to Article 78 of the Road Transportation Law,
which essentially bans the paid use of private vehicles for transportation.
It's perceived similarly to unlicensed taxis. However, while taxis remain, there's a severe
shortage of taxi drivers partly due to COVID-19. Especially in tourist areas and cities,
finding a taxi can take over an hour, leading to taxi refugees.
Taxi refugees spike on Google Trends during tourist seasons.
Another factor is the median age of those working in the taxi industry is astonishingly
70 to 74 years old, highlighting the industry's aging workforce.
With this background, ride-sharing will be partially legalized in April,
aiming for full legalization by June. It's just a few months away.
For the April legalization, taxi companies will secure ride-share drivers, provide training,
and operational management to make it work like a taxi.
Drivers who have undergone training will only operate during peak times.
And those in need can use the GO app to call for a taxi.
GO's website even has a recruitment section for ride-share drivers currently available in
Tokyo's 23 words, Yokohama City, Kawasaki City, and Kyoto City.
Japan's partial legalization of ride-sharing, focusing on avoiding accidents and clarifying
responsibility if accidents occur, is cautious. If a driver contracted with Uber or Grab causes
an accident, they might be penalized, such as being unable to drive for a year.
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However, one reason for accidents could be the lack of prior training for drivers.
Japan's cautious approach, reducing risks under government regulatory control with
taxi companies' managing, is typical. However, this raises a question. Will enough drivers be attracted?
Unlike Uber or Grab, where registration allows flexible working hours and commission-based
earnings, Japan's model restricts driving to set times, and cruising for customers is banned.
Cruising bans shouldn't be a problem with app-based dispatching during peak times, ensuring customer availability.
As for earnings, based on GO's recruitment site, it seems drivers will receive a base salary plus commission,
so working as hard as Kankichi Ryotsu could be lucrative.
This might have been a bit of a rough answer. I will move on to the next discussion.
The second half changes perspective to discuss why couldn't Uber's ride-sharing be introduced.
In conclusion, it's because breaking the law is not allowed in Japan. You might think,
isn't that virus? However, Tim, who runs the podcast Disrupting Japan, says otherwise.
To quote a part of his statement,
a maker jails or fines individuals who break the law, but corporate non-compliance is different.
In fact, there's a school of thought in the West that says when the fines are cheaper than the
cost of compliance, it is not only okay to break that law, but that the CEO has a fiduciary duty
to break the law. This mindset seemed very Silicon Valley-like to me. Building a business model in a
gray area, accumulating cases to create new rules beneficial to them, and achieving a monopoly.
Apple Store and Google Play came to mind, where a portion of all app sales revenue goes to Apple
or Google. There are two conflicting thoughts. The Japanese belief that laws must not be broken,
and the Silicon Valley idea that rules shouldn't sometimes be broken.
How could Uber have been introduced in Japan?
I'll introduce a book as a reference. Implementing the Future for Principles or Changing Society
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with Technology by Takaaki Umadai, who services as a director of FoundX at the University of Tokyo.
After working at Microsoft Japan, he moved to the University of Tokyo in 2016,
where he launched and managed Hongo Tech Garage and has been involved in startup support
and entrepreneurship education as FoundX director since 2019. His publications include
Paradoxical Startup Thinking and Successful Entrepreneurs Choose Their Place.
Looking at Takaaki's book list reminded me of reading Paradoxical Startup Thinking during
my university days. I was struck with a realization. Oh, it was him.
According to his book, superior technology alone cannot realize the social implementation of new
technologies. Even if entrepreneurs create fantastic products or services with decades in
mind, spreading them across society is never easy, requiring a long time and sometimes efforts
falter. To spread new products or services, innovation in how to change society rather
than technology innovation might be necessary. In other words, it's not just about developing
new technology, but creating a society that accepts it. For successful social implementation,
the presence of demand is necessary, along with impact, showing ideas and pathways, risk,
taming uncertainness, governance, creating order, sense-making, getting stakeholders to agree.
Regarding the Uber impact, highlighting the benefits and ideas of widespread ride service,
risk, considering the history of regulations against unlicensed taxis and how to manage
drivers, governance, coordinating with regulatory authorities, sense-making, ensuring all stakeholders
agree. Another perspective suggests that Uber didn't take off in Japan because there wasn't
much demand to begin with. Compared to other countries, the quality of taxis in Japan in the
early 2010s was high. Conversely, countries where Uber has been successful had low-quality taxi
services to begin with, such as reaching destinations incorrectly, fear disputes, or even crime risks.
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In such environments, the platform Uber, which allows easy taxi calling on smartphones with mutual
rating systems, ensuring a negotiated fare and safe transport to the destination, became invaluable.
Although this turned into a serious discussion, researching this topic made me think of
communication with people who are translating processes. To achieve what you want, understanding
the other party's position and needs, then explaining carefully. It's a simple act,
but repeating the explanation when negotiating until the other party is convinced is incredibly
valuable, a realization I've come to appreciate anew. Audio Japan, learning Japan with you.
It's time for ending. Finally, I'd like to share something I learned during this research.
Firstly, the digital agency's notes on Japan's regulatory reforms, updated monthly, is worth
checking out when you have the time. I've been slowly reading through two years' worth of posts,
but they are so dense it takes a lot of time. Also, on February 6th, a company called
Numo announced its entry into the ride-sharing business. Its representative oversaw
Mercari's Japan operations, and the founding members have notable backgrounds, which is exciting.
Another point. On the fourth episode, I talked about convenience stores, and on February 6th,
KDDI announced a tender offer for Lawson. Originally, Mitsubishi Corporation owned
50.1% of Lawson, KDDI owned 2.1%, and other shareholders, including NTT DoCoMo,
owned the remaining 47.8%. This tender offer will see Mitsubishi Corporation and KDDI
operating Lawson with a 50% share each. Considering Lawson's strength in pharmaceuticals
and medical products, I wonder if KDDI's telecommunication technology will turn it
into a support center for medications. And since I had the impression that FamilyMart was the one
innovating, perhaps in the future, DoCoMo might partner with 7-Eleven and SoftBank with FamilyMart.
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Let's see what happens. As I mentioned at the beginning, if you want to listen to the
episodes in Japanese, please go to the podcast, Audio Japan, Anata to Isshoni Nihon Manabu.
Starting in February, new episodes will be released every Tuesday and Friday at 6am.
On Tuesdays, I will cover familiar themes, and on Fridays, I will discuss current Japanese affairs.
I also welcome your comments and letters about the episode.
Please fill out the survey form in the overview section. I look forward to hearing from you.
If you like this audio, please subscribe and follow my channel.
Thank you for listening to the end. My name is Taiki Arai, and I'm an educational designer.
