Mikey Tom August 04, 2016
Earlier this week, news broke that Didi Chuxing and Uber’s China arm were merging, which many interpreted as Uber waving the white flag in the battle for ridesharing dominance in China. After all, the company was reportedly burning $1 billion a year trying to gain loyalty in one of the globe's most sought-after markets. Although merging with Didi is probably not what founder Travis Kalanick had in mind when he started pursuing Chinese expansion for his company, it will free up time and money to focus on other emerging markets, such as India and Southeast Asia.
But it won’t be an easy go for Uber in those markets, either.
Indonesian-based competitor Go-Jek just re-armed for the war to come with a $550 million-plus equity raise from a slew of top investors, including KKR and Warburg Pincus; the company now has a rumored valuation of $1.3 billion. Go-Jek specializes in on-demand motorbike rides—the preferred mode of transportation in its home country, where traffic is notoriously congested and motorbikes can navigate more easily than a car. But the company has also branched into a multitude of other segments, including on-demand food deliveries, courier services, lifestyle services (such as on-demand masseuses) and a nascent e-wallet platform.
Uber, you might notice, currently offers only a portion of what Go-Jek brings to the table. It appears the once-nimble startup may be getting out-maneuvered by a younger, more culturally intelligent competitor, at least in Indonesia. It's a problem Uber will ultimately have to grapple with in any foreign market it enters. Each country is different, and there will likely be a local competitor with an advantage in cultural know-how wherever Uber pops its head up next.
That said, Uber is extremely well-financed and has the institutional knowledge gained from scaling the service to dominance it its home market, the US. That knowledge, combined with billions of dollars in funding and the complex proprietary algorithm that powers its app, make Uber a terrifying opponent. But is that enough to control different geographies around the world?
If the outcome in China is any indicator, Uber has a bumpy road ahead.