Amy
Peters
Uber Pulls Out of Southeast Asia, Selling
Operation to Rival Grab
Uber has recently decided to back
out of doing business in Southeast Asia, both for their ride service as well as
for their food delivery in that area. This decision was brought with great skepticism
since this one of the fastest growing regions in the world, and the opportunity
for Uber growth in the region was tremendous. The company Grab is now acquiring
all of Uber’s current operations in this region, in return Uber gets a 28%
stake in Grab as well as the Uber CEO will now sit on Grab’s board. This is
being seen as a great success for Grab, the Singapore-based company. This is
not the first time Uber has pulled out of expanding areas, backing out of China
and Russia in the past years. Uber’s rationale for these decisions is that they
want to focus on growth and investments in new products and they want to
protect the financials of the company from possible losses before their
expected IPO in 2019. Did Uber make the right decision by giving up this
territory?
4 comments:
Yes I believe so. Although Uber is successful here, it could not compete with local ride sharing companies like Didi Chuxing in China. By pulling out of southeast Asia, Uber probably saved itself from financial loss as well as embarrassment.
I think Uber should not have pulled out from the South-east Asia region given there is tremendous economic growth in the region which could have in fact created a positive mark in the financials of the company. In my opinion, all Uber needed to do was understand the different markets that exist there and chalk out a plan which was more regionally appropriate there.
As the graph in the article showed, the ride sharing market could quadruple by 2025, but that is also a long time from now. I think that Uber wanted to continue growing their already established markets, while still profiting from SE Asia (28% equity in Grab) without having to take as much risk.
I believe that this is a smart decision. Uber's structure is easy to imitate and since it is an international company for Southeast Aisa, it is hard to compete with local companies. Uber is growing so fast and I don't think they have enough time to learn and understand the local culture. Because the local competitors understand more about the culture, their ads and promotions would be more efficient, attracting more customers. I think instead of continuing competing with local competitors, it would be better to sell the operation for competitors' shares.
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