After China, will Uber fail in
Vietnam?
After being acquired by Didi Chuxing in
China, Uber may have to take similar moves in Vietnam and other Southeast
Asian countries, experts have said.
Uber is the latest company joining the list of US
conglomerates that failed in the Chinese market, after Yahoo, Amazon, Ebay
and Microsoft.
On August 1 Didi Chuxing announced it would acquire
Uber’s business in China to create a company with a value of $35 billion.
Uber and its investors will hold about a 20% stake in the new firm.
Uber entered China in 2014, when it was had become
wildly popular worldwide.
However, after a period of stable operations in 60
cities in China, Uber gradually entered a war against a local transport firm
- Didi Chuxing.
In two years, though it spent up to $2 billion to build
infrastructure for the company's operations in China and to lure local
customers and drivers, Uber still failed to grab market share from its local
rival Didi Chuxing.
Statistics showed that Didi Chuxing held up to 85% of
the taxi app market while Uber had only 8%.
Investors called for Uber to stop the fight and sell
itself.
However, Professor William Kirby of the Harvard
Business School argued that Uber did not withdraw from China because of
competition with Didi, but because of regulations on taxi app firms which are
about to be issued by the Chinese government.
It is said that the new regulations, which are much
less harsh than the initial draft, will force taxi app firms to merge with
local taxi companies. Moreover, Uber will also have to ask for certificates
in all areas where it operates while online and offline services will be
managed separately.
After its withdrawal from China, Uber will focus its
operation in other markets, especially Southeast Asia, including Vietnam.
However, like in China, Uber is facing many difficulties in Vietnam.
The first is the strategic business orientation. Like
other markets, and China, in Vietnam, Uber spends a lot to support drivers
and give promotions to customers.
Uber entered Vietnam in 2014 and still maintains a
significant level of support for the driver (accounting for up to 50% of its
revenue), and constantly offers discounts and free trips to users and new
users. Its failure in China shows that this support is not a sustainable
business strategy.
Due to a lack of a clear policy, Uber is also facing
many legal issues in Vietnam.
Last October, following its rival Grab, Uber submitted
to the Vietnamese Ministry of Transport a pilot scheme of operation.
While Grab’s plan was approved by the Prime Minister on
October 19th 2015, Uber’s plan was rejected, reasoning that Uber must have a
legal person in Vietnam to sign service supply contracts with transport
business partners.
The Ministry of Transport asked Uber to revive its plan
but so far Uber has yet to complete the scheme.
Only Vinasun and Grab are permitted to have taxi app
services in Vietnam.
To date, the Government of Vietnam has not yet
collected taxes from this firm. Uber Vietnam Co. Ltd confirmed that it only
provides management and market research services to support the operation of
the parent company - Uber B.V. in the Netherlands.
Meanwhile, Uber B.V. Netherlands, said it operates in a
trans-border form under Vietnam’s commitments to the World Trade Organization
(WTO). As it provides software across the border, it should pay taxes under
the laws of the government of Netherlands.
A major challenge of Uber is facing opposition from
traditional taxis and its rival Grab.
While Grab has cooperated with many local taxi firms,
Uber has become an “enemy” of these firms. The transport and taxi associations
have repeatedly asked the Vietnamese Government to terminate the operation of
Uber taxi in Vietnam.
Commenting on the deal between Uber and Didi Chuxing,
Anthony Tan - Grab CEO - confirmed in a letter to thevGrab team in Southeast
Asia: "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.”
In another move, sources said that after acquiring Uber
in China, Didi Chuxing and Softbank Group Corp. planto invest additional $600
million in Grab.
So, the future ahead for Uber in Southeast Asia and
Vietnam will not be easy.
Chinese car-hailing app to rival Grab, Uber in Vietnam
Didi Chuxing Technology is expected to expand to
Vietnam soon after receiving more than US$7 billion in its latest fundraising
round, said VnExpress.
Didi Chuxing Technology Vietnam JSC, which was only
established a month ago, is in the process of seeking approval for a
car-hailing app similar to Uber and Grab in the Southeast Asian nation.
The app is expected to start a pilot program in
September once local authorities give the nod, the source said.
Car owners will not be charged any registration fee
when they sign up with Didi Chuxing Technology Vietnam JSC. Similar to Grab
and Uber, there will be no metering, radios or company name on Didi’s cars,
and no set hours for drivers, a senior official from the company said, adding
that the company will also connect with customers through Zalo, Wechat and
Facebook.
Didi said in June it raised US$7.3 billion in its
latest round of funding, including US$1 billion from Apple, as it battles to
fend off Uber's march into China, Reuters reported.
After a bruising two-year battle, ride-hailing firm
Uber is giving up its China operations to bigger local rival Didi Chuxing in
an exchange that will give Uber a one-fifth stake in Didi, Reuters reported
on August 1.
The merged entity is worth around US$35 billion -
combining Didi's most recent US$28 billion valuation and Uber China's US$7
billion, Reuters quoted a source familiar with the matter who did not want to
be named before the deal was made public.
Car-booking apps-Grab and Uber have been operational in
Vietnam since 2014 and are both increasingly favored by local passengers,
providing fierce competitors for Vietnam’s traditional taxis.
Compiled by Khuyen Bui, VNN
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Thứ Hai, 22 tháng 8, 2016
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