Osaka firm involved in ride-hailing app raided for alleged use of unlicensed taxis

SAKAI, Osaka -- The Japanese affiliate of a Chinese firm that runs a ride-hailing app was raided by police on March 23 under the suspicion it used unlicensed taxis, investigative sources said.

Both the Osaka Prefectural Police and the Kyoto Prefectural Police conducted the raid at a building connected to Nihon Kohosha Co., with the latter arresting a man in his 30s who is also the ex-chief of the affiliate.

This is the first time for Japanese police authorities to conduct a compulsory investigation on a site connected to a ride-hailing app. The man was arrested under suspicion of violating the Road Transportation Act.

The app "Kohosha" enables users to hail and pay for a ride in advance via devices such as smartphones. However, police suspect that Nihon Kohosha was using the app to lead users to unlicensed taxis -- which are driven by Chinese drivers who are not licensed as passenger transportation service providers and are targeted toward visitors to Japan.

The two prefectural police forces are now looking to uncover the truth over the matter, suspecting that Nihon Kohosha was effectively the Japan sales hub of the app company.

According to the sources, it is alleged that the affiliate guided a user in October 2017 toward an Osaka-based Chinese driver, 34, who did not have the necessary permission from the minister of land, infrastructure, transport and tourism. The driver apparently took the passenger from Kansai International Airport to Osaka and then back again.

It is also suspected that the ex-chief lent a company car with a green license plate to another man, also involved in unlicensed taxi driving in areas such as Kyoto.

According to data such as the register of companies, Nihon Kohosha was set up in February 2017, and has been involved in running hotels, car rentals, and dispatching staff. In November 2017, the company received permission from the Kinki District Transport Bureau to run an "urban hire" service, allowing it to transport customers, subject to certain conditions such as those relating to operating hours.

The two prefectural police forces suspect the company acted in this way to create a smokescreen in order to avoid being caught.

According to the app website, Chinese drivers are registered in at least 60 countries across the world. Chinese tourists in particular can use the app to reserve a ride in advance, entering their preferred destinations and dates.

The service is popular because payments can be made in advance and in Chinese languages. There are numerous drivers across Japan, including roughly 2,000 drivers registered in Tokyo, about 1,400 drivers in Osaka, and approximately 150 in Naha, Okinawa Prefecture.

In countries such as China and the U.S., the act of driving someone in a private car for profit is legal, and is widespread.