Uber is preparing to launch in several Southeast Asian cities over the next few weeks, said its head of Asian expansion in an interview last week. The well-funded startup’s decision to focus there is a sign of the many opportunities for consumer mobile startups in Southeast Asia. Not only are there high mobile penetration rates throughout the region, but also a growing base of affluent customers with a taste for luxury products, a bracket Uber wants to position itself in.
Uber officially launched in Kuala Lumpur last week. This week it will launch in yet another Southeast Asian city, Uber’s head of Asia operations, Allen Penn, told me. Although the location hasn’t been announced, the company recently started deploying “secret Ubers” in Manila and is seeking a general manager for the capital of the Philippines. It’s also looking for someone to fill the same position in Bangkok.
Uber isn’t sharing financial or user metrics for the region, but its strategy is being fueled by $258 million investment led by Google Ventures, which valued the company at $3.5 billion. Part of that funding is earmarked for Uber’s aggressive international expansion strategy. Last year, the company deployed in 12 Asian cities, starting with Singapore in January 2013.
Penn answered some questions about potential barriers in the Southeast Asian market. In the region, Uber competes with other taxi-calling apps like Easy Taxi, which is backed by Rocket Internet, as well as local startups like GrabTaxi. Like Uber, both services say their advantages include safety as well as the ability to track taxis in real-time on their apps.
In Southeast Asia, Uber wants to differentiate from other taxi and car services by focusing on its premium options, like UberBlack.
“I think that we are really focused on building a brand that is really associated with great customer service, a really high feel of quality and a really high level of reliability,” says Penn.
In several cities, Uber has met with resistance from local regulatory bodies as well as taxi drivers who view the startup as a threat to their livelihood. The most extreme demonstration of this sentiment recently occurred in Paris, when protesting taxi drivers damaged an Uber car.
But in Southeast Asia, Uber may not be competing with taxi services for locals who are already comfortable navigating their city’s transportation options.
Instead, a customer base that Uber is setting its sights on are customers who travel frequently throughout the region for business and want the convenience of relying on the same car service whether they are in Singapore, Kuala Lumpur or Manila.
“The amount of people who travel around the region is amazing,” says Penn. “That’s something new cities benefit from. We’ve had people who live in Singapore and have used the product for a year now. They go to Kuala Lumpur for a couple of months and now they have that option there as well. It helps us get off faster and faster in new markets.”
Frequent travelers are also probably the customers who will get the most out of one of Uber’s main selling points: the ease of cashless transactions.
Credit card penetration varies widely throughout Southeast Asia and is relatively low in several of the countries where Uber has launched or is planning to rollout. For example, 39% of Malaysians surveyed by Nielsen use credit cards frequently, but the Philippines has a credit card penetration rate of just 3%.
“If you look at aggregate statistics, you will see that the number looks low, but the reality is that given the market segment we are starting with, we have not seen that to be an issue at all,” says Penn. “Like Kuala Lumpur for example, it’s a very advanced market. It’s a hub for Southeast Asia.”
He adds “There’s not only the local population, but also expats, people traveling throughout Asia using hotels, who all obviously have credit cards. We have not seen that be a stumbling block so far.”
Penn tells me that the twelve Asian cities Uber entered last year were picked in part because the company found that they were “the most straightforward [to enter] from a regulatory perspective.”
But this year, it appears that Uber is going to focus more on potential regulatory and legal issues in potential markets, as well as cities they already operate in. Uber is currently seeking a legal director for the APAC region “with expertise in corporate, litigation and employment law to join the Uber Legal Team as we continue to scale our business globally,” according to a job listing on its site.
This is especially important after the death of a six-year-old girl named Sophia Liu who was struck by an Uber-contracted driver in San Francisco earlier this month. Although Uber’s insurance does not cover drivers between rides, the tragic accident raised questions of whether it should.
Penn says that in Kuala Lumpur and other cities, Uber frequently hires private drivers who have already provided services for hotels or large corporations.
“One of the things we are looking at is making sure that they the level of commercial insurance for that market. That’s something that we are laser-focused on,” says Penn.
“That’s something that we are vetting for every partner that comes into the system. Something we take very seriously, based on the type of vehicles they are operating, is that they have the right level of licensing and registration.”
The job listing for a legal director in APAC also says that Uber wants to continue its rapid expansion strategy in the region over the next two years. Penn says one of the things that Uber looks at as it decides where to launch next are cities where people frequently download its app.
Along with several other taxi-calling app, Uber’s app is so popular in some cities where services aren’t available yet, like Nigeria, that CB Insights recently wondered if it was a bug or an attempt at App Store optimization. But Uber uses app installs, along with other factors, to find new markets.
As Uber expands into other emerging markets, it will also continue its competition with other taxi-calling apps, including the aforementioned Rocket Internet-funded EasyTaxi, which recently received $7 million to expand in the Middle East.
But recently leaked figures show that Uber appears to be in good shape so far, and with its massive funding, the company is well-positioned to continue its aggressive expansion in Southeast Asia and beyond.
[[Image: Uber]]
