Uber Can Take Fight for Rest of Asia up a Gear

Uber urged Taiwan President Tsai Ing-wen to let the island's people decide whether they want Uber services in Taiwan, the latest salvo in the wrangle between the authorities there and the global ride-hailing service company.(Reuters Photo/Sergio Perez)

By : Una Galani | on 9:30 PM August 03, 2016
Category : International, Asia-Pacific, SE Asia

Hong Kong. With China gone, Uber can now take its fight for the rest of Asia up a gear. After trading its loss-making Chinese unit for a minority stake in local rival Didi Chuxing, the US based ride-hailing company can ratchet up the competition in India and Southeast Asia, where it is not as far behind. But Uber must balance the conflicts this could create with Didi with the need to show global growth.

China and India were Uber's priority overseas markets. The problem was that it was losing more than $1 billion a year in a subsidy war in the People's Republic. Uber raised around five times that amount in June, which could go a lot further outside of China.

India is an almost equally populous country but lower prices mean subsidies are less painful in absolute terms. Uber's Indian rival Ola lost just under 8 billion rupees ($119 million) in the last financial year, according to the Business Standard. That's arguably a more reasonable price to retain a presence in a market where the growth potential could help to underpin Uber's own $68 billion valuation.

However, the China deal comes soon after Didi created a global anti-Uber alliance. It took small stakes in both Ola and Grab in Southeast Asia, as well as Lyft in the United States. That means Uber's partner in China is working closely with its rivals elsewhere.

It is unclear if Didi will unwind these partnerships. That could be a problem for local players, who might have been counting on backing from the Chinese group for their next fundraising rounds.

Assuming Didi steps aside, there's no reason why, beyond China, a foreign outfit can't do as well as a local operator. In China, Uber suffered from rule changes and had a deep-pocketed opponent backed by tech giants Alibaba and Tencent .

India and Southeast Asia are smaller, and relatively more open, markets. And Uber has the financial heft to turn up the heat on minnows Ola and Grab, which have a combined valuation one tenth of their US rival. Access to greater resources doesn't guarantee Uber success but reversing out of China will allow Uber to accelerate elsewhere.

Reuters

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