Didi Chuxing’s proposed acquisition of Uber’s Chinese business hasn’t even been confirmed, but the significance of the deal has already prompted responses from others in the global ride-hailing industry.
Anthony Tan who is the CEO of Grab, the company that rivals Uber in Southeast Asia and took investment from Didi last year, told his staff today that reports of a merger to create a $35 billion ride-sharing giant in China are proof that local competitors can beat Uber.
“After more than a year of intense competition, our investor and global partner Didi has effectively won the battle for market share dominance in China,” Tan wrote in a company-wide email obtained by TechCrunch.
“Didi’s success reinforces what we have believed all along,” he added. “That we live in a very diverse world and there is no one-size-fits-all answer. Localized solutions best solve local problems. Like Didi did in China, we make sure that the unique pain points of users in Singapore or Jakarta or Manila will get addressed because they are prioritised over the competing needs of users in New York or London or Istanbul.”
We reported last week that Uber’s operations in Southeast Asia are already profitable in two markets — Singapore and the Philippines — and that the U.S. firm is making a major move to launch new products across the region. That strategy makes more sense now given today’s reports of a China exit.
Along those lines, Tan cautioned that Uber’s withdrawal from China will likely mean that the company significantly ups its game in Southeast Asia.
“With the deal in China, we expect Uber to turn more attention and divert resources to our region,” he told Grab staff.
“But we have seen that when the local champion stays true to their beliefs and strengths, they can prevail. We see this happening in China, and it will be the same here. They’ve lost once, and we will make them lose again.”
Uber is widely believed to be leaving China after finding the country to be unsustainable due, in a major part, to Didi’s significant war chest which has funded a subsidy war that has reportedly cost Uber $2 billion to date. It looks like CEO Travis Kalanick has called time on that battle, perhaps to focus on an IPO next year.
The stakes are not so high in Southeast Asia, where online commerce and digital spending is far lower, but a cumulative population of more than 600 million makes it a region that could be hugely significant as its digital economy matures. So, while it isn’t surprising that Tan is rallying his troops with this message, it isn’t clear just how much intel from Didi’s ‘win’ can be applied to Grab’s own battle with Uber.
Grab has raised over $650 million to date, including its most recent Series E round of $350 million one year ago at a valuation of around $1.6 billion. It covers 30 cities across Southeast Asia’s six largest countries where it claims 19 million app downloads and 350,000 drivers. Uber is in 16 cities but it doesn’t release figures. Southeast Asia has generally been a lower priority to its efforts in China and India.
Tan’s full memo is below:
Dear Grabbers,
There has been a development in the global ride-hailing space that I’d like to share with you.
Didi Chuxing and Uber are rumored to announce a deal very soon in China. After more than a year of intense competition, our investor and global partner Didi has effectively won the battle for market share dominance in China.
Didi’s success reinforces what we have believed all along.
That we live in a very diverse world and there is no one-size-fits-all answer. Localized solutions best solve local problems. Like Didi did in China, we make sure that the unique pain points of users in Singapore or Jakarta or Manila will get addressed because they are prioritised over the competing needs of users in New York or London or Istanbul.
That a team that lives and breathes the markets it operates in makes a difference. Because our users are also people whom we care about – our families, our neighbours, our friends. And not just some digits presented on a business dashboard at the other side of the world in a different time-zone.
That we are here for the masses and hence a broad selection of transport options is needed to serve their diverse needs – from the businessmen arriving for a meeting in style on GrabCar+, to the students using GrabBike to beat congestion and reach classes on time; from drivers depending solely on Grab to feed their families, to the car-owners using GrabHitch to subsidise their driving costs and to make new friends. Because we know that we are not here to only serve a privileged segment of users who can afford surge-pricing.
These beliefs have served us well. We are everywhere in our region, serving many many people in our cities everyday in our countries and communities. We are driven by the purpose to improve the lives of people in Southeast Asia. We have built a strong team that connects with our region, a team that firmly believes in “Your problem is my problem”.
With the deal in China, we expect Uber to turn more attention and divert resources to our region. But we have seen that when the local champion stays true to their beliefs and strengths, they can prevail. We see this happening in China, and it will be the same here. They’ve lost once, and we will make them lose again.
Let us seize this opportunity. More than ever before, we must continue to leverage on our strengths. To listen and to put ourselves in the shoes of our users and partners. And ultimately deliver the best passenger transport solution that this region has ever had.
God speed
Anthony