Grab setting wheels in motion for victory in ride-hailing fight

Models stand beside Grab cars in Phnom Penh during the ride-hailing firm’s launch in December. AFP
Models stand beside Grab cars in Phnom Penh during the ride-hailing firm’s launch in December. AFP

Following reports that Uber plans to sell some of its Southeast Asia assets to Grab, the strategies and experiences of the two ride-hailing applications in Cambodia reveal differences in the pairs’ approaches to new markets.

News of the sale has been rumoured for months, but Bloomberg and the Wall Street Journal have reported in recent weeks that the two companies have agreed in principle to a deal that would transfer most of Uber’s regional operations to Grab.

 

Representatives of both firms in Cambodia declined to comment on any potential deal. Both companies have said they are seeking to localise services to adapt to the Cambodian market, which already features several ride-hailing platforms run by local entrepreneurs.

US-based Uber beat Grab to market in Cambodia, launching in September last year by signing a memorandum of understanding (MoU) with the Ministry of Public Works and Transport (MPWT).

 

It began offering its hallmark service, a sleek app that allows customers to call cars whose drivers take them to a predetermined location set on the app.

It was a fairly unique service in Cambodia, where taxis are a rarity and demand for drivers is often filled by motorbike drivers, tuk-tuks or auto-rickshaws.

So when Grab launched a few months later, it appeared they were behind the curve. But the Singapore-based company, which has focused on Southeast Asia and is known for adapting to local markets, has rapidly worked to establish itself in the Kingdom.

After signing an MoU with the MPWT in December, Grab went on to sign agreements with the Anti-Corruption Unit in January and the United Nations Development Programme last month. It has also launched a promotional code to donate $1 per ride to Kantha Bopha Children’s Hospital and piloted GrabBike, a service allowing customers to hail motorbike drivers, which is a popular feature in other countries in the region.

Meanwhile, Uber did not hire a general manager in the country until January, and has not announced any partnerships with other agencies or government departments.

Grab also appears to have the favour of the government. During his remarks at Grab’s launch event in December, Transport Minister Sun Chanthol said he hoped Grab “can sign an IPO [initial public offering] soon, before their main competitor”, an apparent reference to Uber.

The race to IPO is likely what’s driving Uber to sell its Southeast Asia business, which faces stiff competition, according to analysts. The firm has undertaken similar sales in China and Russia.

Grab may also have been helped by the political climate in the Kingdom. Prime Minister Hun Sen has lashed out at the United States in recent months, accusing it of colluding with the now-dissolved opposition party to enact a “colour revolution” in the country.

He has specifically targeted US Ambassador William Heidt, most recently calling him a “liar ambassador” earlier this month. Ambassador Heidt spoke at Uber’s launch in Cambodia in September, hailing the company as “one of America’s most exciting and innovative technology companies”.

Whether politics played a role or not, Grab has appeared to more succesfully garner the support of the government.

But if a firm’s success hinges on its ability to adapt to local markets, home-grown apps such as ExNet and PassApp may have the natural advantage, according to Gordon Peters, partner at investment firm Mekong Strategic Partners.

“Being able to ‘win’ in this market requires offering a good customer experience and good driver relationships,” Peters said yesterday. “Local ride-hailing apps seem to understand Cambodian drivers better at the moment,” he said, adding that he expected companies like Uber and Grab to be able to adapt eventually, buoyed by their significant advantages in money and technology.

But until that time, the founders of local ride-hailing apps don’t appear worried.

“Our customers still keep increasing, even though Grab and Uber are here,” said Top Nimol, founder of PassApp which employs over 1,000 drivers. “All of our services are increasing every day.”

Hor Daluch, the founder of ExNet, said he thought Grab was doing a better job than Uber of expanding into the Cambodian market, but noted he didn’t view the company as a rival.

“Grab is not too much competition for me, even with its new GrabBike,” Daluch said. “It is too expensive in comparison, and not as good as a rickshaw.”