Japan is one of the world’s most beautiful and friendliest countries. From bustling Tokyo to Zen-like Kyoto, Japan is high-tech mixed with the politeness and respect of the past. It’s a wonderful place to visit and soak in tradition.
The Japanese people are known for being well-mannered, kind, and humble—there’s even a culture of no tipping. Often referred to as “omotenashi” which roughly translates to hospitality. Although Japan faces challenges, like many nations, Japan sets the bar high regarding attitude and demeanor.
Last Fall, I had the privilege of going to Japan with my family for two weeks. While experiencing their culture I noticed many similarities to the United States, but also took note of many cultural differences. This may sound strange, but the one thing that stuck with me since the trip has been their taxi industry. As anyone who has visited can attest, the Japanese taxi industry is something special. They’re widely known for spotless cars and polite drivers. The service of even the most quotidian taxi in Japan is equal to the luxury limo services in most places. Doors open themselves. Cars, though old fashioned, are immaculate, and the drivers are courteous, even going so far as to wear white gloves.
Worth nearly $20 billion, the taxi industry in Tokyo is among the world’s biggest. However, what one doesn’t see in Japan is the nemesis of taxis—ridesharing. Uber, Lyft, and their various competitors have no place on the Japanese vehicle for hire market.
What has made Japan so resistant to the companies that have disrupted so many other countries? Firstly, and most obviously, Japan is a country steeped in tradition, and as such, exogenous change is greatly suspect. Secondly, while Japan heavily regulates other industries, the taxi industry is in many ways less regulated. While other countries have protected their cabbies with closed markets of legally limited supply, the Japanese industry has an open system of scaling supply.
The Japanese cab industry has not always been regulated as stringently as it is today. In the decade after World War II, the Japanese government had little stock in cab drivers. This lack of oversite in post-imperial Japan led to aggressive cab drivers looking to profit off the need for transportation in the rebuilt country, and its booming economy. The driving of these early cabbies became so savage, that domestic magazines like Shukan Shincho ran articles like “The Terror of Kamikaze Taxis.” With this style of belligerent driving came inevitable fatalities. In 1956, Tokyo alone saw over 700 taxi-related deaths. When Hirofumi Igarashi, the captain of the University of Tokyo soccer club, was killed politicians were pressured by the public outcry to enact regulations that laid the groundwork for the reserved culture of today’s Japanese taxis.
In the early 2000s, the Japanese government began to lessen the regulation of taxis. While licensing requirements remained daunting, the limitations on the number of taxis working in given areas were removed. This period led to some consternation in the industry, with increasing competition as taxi companies beefed up their fleets. However, this deregulation also made the industry supply more adaptable, and connected to consumer demand.
When Uber came to Japan in the 2010s, it was held off by license regulation. But what really stopped the company from making a foothold—aside from food delivery—was the Japanese taxi industry’s acceptance of competition. For example, when people need more or fewer cabs, the market reacts accordingly. And when app-centered competition became a concern, Japanese taxis preempted ride-hailing services main value proposition by developing their own app. Today in Japan, one never sees someone using an outsourced ride hailing service. But ads for taxis, highlighting their convenience, are everywhere.
The taxis’ high-quality service is one reason ridesharing services haven’t taken off in Japan. Yet it is fair to wonder if that could soon change as it gets closer to the 2020 Olympics in Tokyo. The flood of tourists who typically open their ridesharing apps when they arrive in a new country could certainly put the Japanese traditional taxi system to the test. It appears that some of Japan’s biggest players are preparing themselves for future changes, Sony launched a taxi-hailing app in Tokyo and Tokyo’s SoftBank is one of Uber’s largest shareholders—for better or worse.
Taxis are an essential transportation mode in Japan for foreign visitors and busy Japanese workers. Their ability to provide a top-class service while fending off trendy ride-share services has been admirable and impressive. As we begin the new decade, it will be interesting to see if this remains the status quo for the next time I visit Japan.