Taxi Alliance Stops Uber from Disrupting Tokyo’s Ride-hailing Industry
Uber’s blitzkrieg (translated from German as the “lightning war”) strategy to disrupt and conquer the ride-hailing industry in cities, continues to face strong opposition and resistance from taxi unions and regulators. In 2015, taxi unions in Tokyo joined forces to bring the ride-hailing giant to its knees – Their victory sets the stage for taxi unions around the world to resist the Uber’s invasion.
In 2015, the ride-hailing giant that was threatening the existence of a taxis cab companies and trampling over regulations in many cities, entered Tokyo.
Uber’s attempt to disrupt Tokyo’s ride-hailing market backfired; both the cab industry and the citizens of Tokyo declined the ride hailing application. Today, Uber only operates a limited UBERBlack and UberTaxiLux e-hailing services, with authorized drivers, in a little part of Tokyo, and two pilot projects in the country, Tangocho near Kyoto and Nakatonbetsu in Hokkaido.
A key element behind Tokyo opposition to Uber was the strong and united effort by the Japanese taxi industry, led by its labor unions.
The Japanese taxi cab industry has a fairly high unionisation rate, about 40 percent, based on data provided by ZENROREN, the nationwide confederation of Trade Unions in Japan. Further, in Japan, the majority of drivers aren’t independent contractors. They work for taxi companies, as is the case in a lot of other nations.
There is little cooperation among the various unions until Uber entered the marketplace, says Masatoshi Takashiro, chairman of the Japanese Taxi Drivers union Jiko Soren. Takashiro was one the leaders in the anti-Uber movement.
“Individually, we can’t do the campaign ourselves,” Takashiro says. “Other unions felt a sense of risk — and wanted to work together.”
The taxi cab unions in Tokyo observed how Uber interrupted and frequently severely weakened taxi cab industries in other cities around the globe.
Armed with the knowledge of the ramifications of unregulated ride-hailing applications on the benefit of its members and the tactics Uber would utilize to muscle its way to Tokyo, they were able to develop an effective strategy to resist it.
One key point that Jiko Soren and its allies focused on was safety. There are many documented incidents of Uber drivers committing crimes around the globe. The company has drawn critique for not thoroughly vetting its drivers. In Japan, the taxi industry is recognized for its quality and safety, an immediate result of the regulations that unions have struggled for over the past years.
Presenting Uber as a threat to the safety of passengers along with its possible negative impacts on employees was a strong argument for consumers in Japan.
“Japanese taxi services are one of the top in the world,” says Kazuhiko Kikuchi, the chief secretary at Jiko-Soren. “For example, the Governor of Tokyo said that, only in the taxis in Japan, if you forget your wallet in a taxi, it will come back to you.”
Jiko Soren along with other taxi unions organized a mass rally in March 2016, and after that presented its demands to the Japanese Government. The show of unity worked, as soon afterwards, the government decreed that ride hailing wouldn’t be allowed in Tokyo, closing the door, for the time being, on Uber’s vaunted model in the world’s richest city.
Of course, regulations haven’t stopped Uber from offering its services in other cities. But in Japan, that’s just not possible, because another key factor in Uber’s failure was Japan’s strong social norms that govern nearly every aspect of life.
Uber’s strategy to break the rules and then try to get them changed in its favour contradicted how business is done in the country.
Uber’s failure in Tokyo was also a triumph for labor unions, taxi drivers, and regulators seeking to keep the balance in a city with a number of transportation options.
Nevertheless, taxi companies and unions aren’t celebrating just yet. They know that Uber is actively lobbying the government to change its ride-hailing regulations before the 2020 Olympics. Still, their collective strength may make them a powerful opponent. What happened in Tokyo sets the example for other cities around the globe, especially ones where Uber has not made any inroads however, that wish to curtail its disruptive business practices.
Uber has attracted a lot of attention from regulators. Cities around the globe has begun to pass legislation banning private car drivers from operating like a taxi, citing safety concerns over Uber’s lack of checks on drivers, their failure to get proper insurance, and mobile phone numbers and credit card numbers possibly being “leaked” by the app.
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