Lyft is considering entering Japan’s challenging ride-hailing market for some reason

Lyft, Uber’s chief nemesis in the U.S., is thinking of entering the fiercely competitive Japanese ride-hailing space, according to comments from one of its founders.

“We would love to be in Japan, and we also will be looking at that possibility,” John Zimmer, Lyft co-founder and president, said at the New Economy Summit 2018 in Tokyo.

“I think the regulatory framework here will play an even larger role than it likely had in other regions,” he added, according to a report from Japan Times.

Lyft made its first global expansion when it entered Canada last December so it is natural that the firm is eyeing overseas opportunities. Japan is one that springs to mind since it has counted Rakuten, the country’s dominant e-commerce service, as an investor since 2015, while the taxi market is one of the most lucrative in the world. Business in Tokyo alone is estimated to be worth over $15 billion in annual sales.

Hopping over the border to Canada is an obvious first move for many companies, but Japan would, by contrast, be a far more complicated market for Lyft to navigate.

Just ask Uber.

The U.S. giant has struggled to gain a foothold in a market that remains dominated by licensed taxi operators. Uber CEO Dara Khosrowshahi recently paid a visit to Japan where he said he conducted “promising” meetings with taxi companies aimed at boosting Uber’s licensed taxi product in the market.

However, there are plenty of rivals.

Japanese taxi companies have an Uber of their own, JapanTaxi, which recently raised $69 million from Toyota. (Toyota is also an Uber backer, but those conflicts are becoming normal.) Beyond top backers, JapanTaxi is notable for being owned by Ichiro Kawanabe, who runs Japan’s largest taxi operator Nihon Kotsu and heads up the country’s taxi federation.

Other rivals include Line, Japan’s top messaging app which has offered taxi services for a few years, while Sony plans to introduce AI-based taxi hailing and Didi, Uber’s Chinese frenemy, is planning a Japan expansion in partnership with SoftBank, the notorious Uber investor.

In short, Lyft may harbor an interest in Japan but it would do better to prioritize less complicated markets for its next expansion.