Marketing Random

Why did Uber withdraw from the Southeast Asian market?

According to many leaked sources, Uber’s sale of its Southeast Asian business could be in exchange for a 15-20% stake in Grab.

Uber exits Southeast Asia

According to The Wall Street Journal, the global ride-hailing app Uber has reached an agreement in principle with rival Grab to withdraw from the Southeast Asian market.

Many experts believe that this is considered a wise move, similar to Uber’s withdrawal from the Chinese market in exchange for a 20% stake from ride-hailing company Didi Chuxing in 2016.

According to experts, the number 1 reason to explain this departure is that Uber CEO Dara Khosrowshahi is speeding up the process of “beautifying” financial statements to bring this company can advance soon. IPO before 2019. Pulling out of costly markets like Southeast Asia could help boost Uber’s profits. Since it was founded in 2008, this startup has “burned” about 10.7 billion dollars and is still reporting losses.

In addition, investors pouring money into Uber are urging the Board of Directors to quickly cut losses and redefine Uber’s development direction as high-tech, electric vehicles, autonomous … so they will focus on the countries meet the infrastructure to develop that field.

What are Grab’s advantages in Southeast Asia?

As for Grab, the company officially expanded its market to Southeast Asia in 2013 – the exact year Uber entered its business. Grab has also repeatedly reported losses like in Vietnam, after 3 years of operation, the company reported a loss of about 938 billion. Obviously, both Uber and Grab are losing money.

Uber and Grab both admitted that they are “burning money” to compete in Southeast Asia, but the fact that Uber “sold itself” is trendy, while if it buys Uber’s business, Grab will no longer be. The competition is too big, alongside ride-hailing start-ups in other countries.

While Uber is still proud of its global coverage, Grab is confident of being identified with the Southeast Asian market. It chooses to focus heavily on localization of services.

Realizing that the majority of users in Southeast Asia do not have a credit card, Grab has proactively allowed cash or credit card payments from the very beginning. In addition, this company has adjusted quickly to the needs of local customers and searched for a niche as in Myanmar, there is only a taxi service. And Grabbike is also limited to Thailand, Cambodia, Indonesia and Vietnam – the four countries with the largest motorcycle density in the region. As tourist cities develop, there are more deliveries and food delivery.

Particularly in Singapore – which is headquartered and also the first testing market for new services – Grab has more than 10 services from cars, taxis, to booking passenger cars and buses with the latest 13-40 seats. is a shared bike.

In 2017, Grab claimed to have 95% market share in ride-sharing and 71% in private ride-hailing. While Uber is gradually narrowing its market reach, Grab is still sticking with and increasing its influence in Southeast Asia.

Minh Duc / The Wall Street Journal
* Source: Investment bridge


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