Global ride-sharing app Uber is setting its sights on Southeast Asia. However, the region’s established companies will likely put up a strong fight
Ride-hailing company Uber is reportedly allocating 150 of its engineers from China to other markets, including Southeast Asia, a region already awash with ride-sharing services.
The move comes after Chinese competitor Didi Chuxing announced it would buy Uber in a $35 billion deal, ending a two-year, multibillion-dollar rivalry between the two firms for control of the Chinese market.
In a blog post yesterday, Uber CEO and co-founder Travis Kalanick cited a lack of profitability by both Uber and Didi Chuxing as the main reason for the deal.
Although Uber, a worldwide company valued at $68 billion, says it is already profitable in Singapore and the Philippines, Singapore-based GrabTaxi says it controls 95% of the ride-sharing market in Southeast Asia. Grab also claims to have 350,000 drivers across its markets in Malaysia, Singapore, Thailand, Vietnam, Indonesia and the Philippines.
In a leaked email yesterday, Grab CEO and co-founder Anthony Tan told his company that he anticipates stiff competition from Uber as the company targets Southeast Asia. “With the deal in China, we expect Uber to turn more attention and divert resources to our region,” he wrote.
“But we have seen that when the local champion stays true to their beliefs and strengths, they can prevail,” he added. “We see this happening in China, and it will be the same here. They’ve lost once, and we will make them lose again.”
In Indonesia, ride-hailing company Go-Jek already has an established motorbike taxi service. It claims to have more than 200,000 bike drivers and also offers on-demand food delivery.
Eddie Thai, a venture partner with investment firm 500 Startups Vietnam, said Grab will likely best Uber in more regulated markets such as Singapore.
“Grab is more familiar with Southeast Asian political and business culture and more active in partnering with existing major stakeholders such as taxi companies,” he said.
“In less-regulated markets, it may be a tougher fight for Grab, since Uber is so deep-pocketed and has a wider global footprint across which it can spread overhead costs.”
Though Uber is profitable in North America, Australia, Europe, the Middle East and Africa, it has paid relatively little attention to Southeast Asia, a region with a population of more than 600 million.
The company began services in Singapore more than three years go, but it has been two years since its last expanded expansion in the region, by launching in Vietnam.
A study by Google and Singapore state investment fund Temasek predicts that the ride-hailing market in Southeast Asia will grow from $2.5 billion last year to $13 billion by 2025