Uber’s strategy took a surprising shift when the company announced in March 2018 that it will be exiting Southeast Asia.  The rideshare giant will be selling its stake in the region to Singapore based, Grab signaling the end of Uber in Southeast Asia.

This isn’t the first time Uber will be surrendering to competition when faced with tough opposition. In August 2016, Uber’s former CEO, Travis Kalanick issued a statement on his Facebook page confirming news that Uber’s China Business will be uncharacteristically merging with Didi chuxing, a Chinese ridesharing giant. This was an unprecedented move as Uber is known worldwide for its aggressive territorial stance in countries where it operates.

Citing reasons behind the merger, Travis stated, “Sustainably serving China’s cities, the riders and drivers who live in them is only possible with profitability. This merger paves the way for our team and Didi’s to partner on an enormous mission, and it frees up a substantial resources for bold initiatives focused on the future of cities — from self-driving technology to the future of food and logistics.”

Now, Uber will be exiting 8 cities in Southeast Asia: Singapore, Indonesia, Philippines, Malaysia, Thailand, Vietnam, Myanma and Cambodia.

Uber stated it won’t receive any cash from the sale. The company “will get a 27.5% stake in the combined company. Around 500 colleagues across the region will transition to Grab, and over the coming weeks we will help our customers move to Grab’s apps” Uber’s current CEO, Dara Khosrowshahi said in a statement issued on the company’s website. 

 

What This Means

Southeast Asia is the third market Uber will be exiting after facing strong competition. This has prompted people to ask if Uber is shedding weight and going light. The company is known for dominating new markets even if there is strong opposition and these recent moves are a clear departure from Uber’s strategy.

To shed more light on this, Khosrowshahi said “One of the potential dangers of our global strategy is that we take on too many battles across too many fronts and with too many competitors… going forward we will be focused on organic growth—growth that comes from building the best products, services and technology in the world, and re-building our brand into the mobility brand that riders, cities and drivers want to support and partner with.”

 

What we Think

This is a wise move by Uber in Southeast Asia. Why expend resources in markets that are generating no profits and are clearly dominated by stronger opposition? If you stand to gain more by selling off struggling operations and making strong partnerships, then by all means do so. Grab has a stronger hold in Southeast Asia where its food delivery, car pooling, cashless payments and bike share services are available in 191 cities. Uber in Southeast Asia didn’t seem like a profitable business in the long run thus, prompting this shocking exit. UberEATS and Uber’s ridehailing services will now be available on Grab’s app.

 

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