Uber meets local lookalikes in Asia taxi-app wars

U.S. ridesharing service taking on established local competitors overseas.
By KAY JOHNSON, Associated Press Modified: April 26, 2014 at 12:27 am •  Published: April 26, 2014
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Riding on its startup success and flush with fresh capital, taxi-hailing smartphone app Uber is making a big push into Asia. There’s a twist, though: Instead of being the game-changing phenomena it was in the U.S., Uber faces a slew of competitors using similar technology.

The concept Uber helped pioneer just four years ago has transformed some markets before it even had a chance to enter them. Homegrown taxi apps are already slogging it out for dominance in numerous Asian countries.

China has a taxi-hailing app called Kuadi that says it logs more than 6 million transactions per day. Malaysia-based GrabTaxi operates in five Southeast Asian countries and recently announced more than $10 million in new investment. India has two competing taxi-app companies, Meru Cabs and Ola Cabs.

The proliferation of taxi apps means that Uber, which raised $258 million in venture capital last year, much of it from Google Ventures, must distinguish itself from local companies as well as international challengers including Easy Taxi and Lyft. This month, Lyft got a $250 million cash infusion from investors including Chinese e-commerce giant Alibaba.

“We have to build our brand up from scratch in a lot of these places,” said Sam Gellman, who is heading Uber’s Asian expansion.

Local strategy

To compete against local lookalikes, Uber said it is taking a two-prong strategy. First, partner with local players who can tailor their business to demand, whether for fast no-frills rides or luxury cars on call. Second, target Asia’s upwardly mobile business travelers who will appreciate having one service they can use in dozens of cities worldwide.

The company has in the last year started operating in 18 cities in Asia, Australia and New Zealand including Seoul, Shanghai, Bangkok, Hong Kong and five Indian cities.

Uber uses a free GPS-enabled app for customers to use their phones to summon rides, usually from a private car company instead of an ordinary licensed cab and promising a quicker response time that is often within 10 minutes. Drivers respond using their own Uber-provided smartphones mounted on the dashboard and follow the map to an exact location.

In the U.S. and Europe, Uber has variously drawn acclaim by urban customers tired of difficulty finding cabs and protests by taxi companies accusing it of running unlicensed taxi services. Just last month, an organization representing Seattle-area taxi drivers sued Uber, alleging it is involved in “unlawful and deceptive business practices.”

Legal woes, though, are less of a problem in Asia than lookalike local competitors. The business models of Asian rivals vary: some run their own fleets, others depend on advertising, while Uber makes commissions on fares, but all employ distinctly Uber-like smartphone apps.