While Uber has struggled to establish itself in South-East Asia, Grab holds a 95 percent of the region’s taxi-hailing market
On July 24, Uber’s Singapore-based rival Grab announced it expected to raise $2.5bn from its latest round of investment; a figure it claims represents the largest in the history of funding in South-East Asia. The funding will deepen the “strategic partnership” between Grab and its existing shareholders Softbank and Didi. Together, the two firms have put forward $2bn, with Grab confident of raising a further $500m from elsewhere.
Since its inception in 2012, Grab has expanded rapidly in South-East Asia, providing significant competition to Uber, which has famously struggled to build a base in the region. Uber recently sold its Chinese assets to Chinese ride-hailing firm Didi, after encountering a number of regulatory and market obstacles.
A key hurdle for US-based Uber has been accumulating the necessary local knowledge to successfully launch its services across South-East Asia. Alan Jiang, former General Manager of Uber Indonesia, has described the South-East Asian market as “unique in that it’s extremely fragmented”.
Grab has expanded rapidly in South-East Asia, providing significant competition to Uber, which has famously struggled to build a base in the region
According to Jiang: “If you want to go big, you need to go international quickly. This means understanding multiple cultures and languages, localising the product, navigating unique political environments, connecting with local business contacts [and] recruiting for a local team.”
Grab currently holds a 95 percent share of South-East Asia’s third-party taxi-hailing market, as well as a 71 percent share of the region’s private vehicle hailing market. The company delivers transport services to 65 cities across Singapore, Indonesia, Philippines, Malaysia, Thailand, Vietnam and Myanmar, providing approximately three million rides per day.
In a company press release, Didi founder and CEO Cheng Wei said: “Starting with transport, Grab is establishing a clear leadership in South-East Asia’s internet economy based on its market position, superior technology and truly local insight.”
This latest influx of funding will be used to solidify Grab’s market position in South-East Asia, as well as bolster investment in its mobile payments platform, GrabPay. The payments platform not only enables customers to pay for rides, but also provides a number of other financial products, which could help the firm tap into new markets that have low levels of engagement with traditional banking systems.