SCOOTER DRIVERS in vivid green helmets brighten up the twilight of rush hour in Ho Chi Minh City, Vietnam’s business center. This eye-catching fleet carries customers of Grab, a Southeast Asian transportation company.
Its business of connecting travelers with taxis, private cars and motorcycle taxis in six countries covers a region twice as populated as America and rapidly urbanizing. Its future seems secure if it will possibly compete with Uber, a wealthy American competitor.
Much of the $1 billion in money that Grab is holding for investment purposes can be invested in its digital payment system “GrabPay”, which went live in January 2016.
In November 2016, Grab updated GrabPay, changing it from a digital payment processor, mainly useful for individuals who already had credit and debit cards, to a digital payment processor a wallet that Southeast Asians can replenish with credit by making money payments at banks and a few convenience stores. Currently, people mainly use GrabPay to pay for Grab rides, however the goal is for purchasers to eventually use it to purchase all types of on a regular basis items.
But such dreams depend upon Grab defeating local rivals and defending its business against Uber, which is about 20 times more priceless. Grab’s investors include Temasek, Singapore’s state investment firm, and China Investment Corporation.
In September, SoftBank, the Japanese telecommunications and technology company owned by Masayoshi Son (which last yr announced a $100 billion technology investment fund in partnership with Saudi Arabia and other investors), led a bunch that put in $750 million in Grab, valuing it at over $3 billion.
Uber operates in all the identical countries – Indonesia, Vietnam, Philippines, Thailand, Malaysia and Singapore – but in 20 cities in comparison with Grab’s 34. The US company suffered a setback last yr that paradoxically makes it a stronger rival: in August it abandoned its costly try to break into China and sold its business there to Didi Chuxing, a neighborhood competitor that can be an investor in Grab. The deal freed up resources that Uber is now using to push deeper into Grab’s territories.
Grab still claims to have services higher suited to the needs of Southeast Asians. Tan points to GrabHitch’s offering, for instance. Many people in Jakarta, Indonesia’s capital, live in suburban buildings miles from the central business district and commute to work daily on scooters.
GrabHitch allows them to advertise their route and travel time within the hope that they’ll find someone willing to present them a ride on the back of their scooter, paying a nominal sum to cover gas and bike maintenance costs. Uber doesn’t offer anything this informal and low cost.
Indonesia is a key battleground: its population of 257 million makes up greater than a 3rd of the region’s population. Since launching motorcycle taxis in Jakarta in May 2015, Grab has step by step gained the advantage previously enjoyed by Go-Jek, a neighborhood ride-hailing company, and appears to have a bonus.
Uber, a late entrant to the market, is currently in third place. On February 2, Grab announced that it is going to invest $700 million in Indonesia over the following 4 years. For Grab, Southeast Asia’s traffic-choked megacities will not be “just one other” market, says Tan. “This is our home.”
Source: Economist
