On Monday, Uber Technologies Inc. announced that it will forego its operations in Southeast Asia to Grab, a local ride servicing company based in Singapore. These regional operations include Singapore, Indonesia, Philippines, Malaysia, Thailand, Vietnam, Myanmar, and Cambodia. In exchange for relinquishing its businesses in several emerging markets, Uber will acquire at 27.5% minority stake in this fast-growing company. Along with its equity ownership, CEO Dara Khosrowshahi will retain a board position at Grab as he will be vital in this new company’s growth. There are many speculations that Uber has “retreated” or “lost” overseas, but it may suggest otherwise upon further analysis.


Although Uber may be the more favorable and convenient form of transportation in the United States, Uber has been faced with strong local competition. For the privately held company, this consolidation marks the third deal of its kind in the past two years. In 2016, Uber completed a similar deal in China with Didi and with Russia’s Yandex the following year. Over the past five years, Uber has invested $700 million in Southeast Asia. Grab was more dominant with a larger market share and solid investor funding from Softbank Group Corp. and Didi—Grab was most recently valued at $6 billion. Mr. Khosrowshahi explained that this recent deal would “help us [Uber] double down on our plans for growth as we invest heavily in our products and technology to create the best customer experience on the planet.” It is estimated that Uber was losing roughly $1 billion with its foreign operations. However, the Southeast Asia region is projected to be a major growth market for ride services, and Uber has retained a large equity ownership with its market leader, along with ownerships in Didi and Yandex. Uber’s position is estimated to be worth over $1.6 billion and is likely to appreciate in the coming years. As Uber maintains a presence in Southeast Asia via proxy, it will be able to focus on growth in other regions as it expects to undergo an Initial Public Offering in 2019.


Forming this partnership will allow Uber to focus on other emerging markets such as India and Brazil. Like the potential in Southeast Asia, growth forecast is enormous for ride-hauling services in Latin America and India. However, as any pursuance overseas, Uber will be facing local competition once again. Uber will be competing with ANI Technologies Inc.’s Ola in India and with 99 in Brazil. Japan’s Softbank Group Corp. owns 30% of India’s Ola, and China’s Didi has equity ownership in Brazil’s 99. The competition is clashed as Softbank partially owns Uber and Ola and Uber partially owns Didi. Uber’s battle for Brazil and India is just beginning, but Mr. Khosrowshahi is reluctant of past strategies. Mr. Khosrowshahi wrote in an email to employees: “It is fair to ask whether consolidation is now the strategy of the day, given this is the third deal of its kind, from China to Russia and now Southeast Asia. The answer is no.” Although Uber aspires for globalization, it also has problems back home. Uber has stiff competition with Lyft in the United States, and the recent, major scandal involving Uber’s driver-less car is causing a strain. Uber is expecting to go public in 2019 and needs to handle these domestic problems while dealing with foreign competition.


Uber has revolutionized the transportation business as its more convenient services are dominating traditional taxi services. Although Uber is widely liked in the United States, the company has underestimated its competition overseas. As Uber extends its presence in foreign territory, it is not able to focus its services to better cater local markets and its consumers. Local companies have a competitive advantage as it knows the market better and can execute its services accordingly. As any business, it is necessary to know the market—consumers and competitors. A company’s business plan can be successfully applied in certain regions, but it may be necessary to implement an alternative approach as the market may differ significantly. Uber has underestimated the competitive advantage the local companies hold, but it has geared itself for further growth through consolidation.