The fierce competition between Grab, south-east Asia’s leading ride-hailing service, and Go-Jek, its Indonesian rival, is set to explode across borders as the latter rolls into Vietnam with plans for further regional expansion.
Go-Jek, until recently confined to Indonesia, has announced its full launch in Vietnam. It now offers motorbike ride-hailing and courier services in Hanoi and Ho Chi Minh City, the country’s two largest metropolitan areas.
Operating through its local partner Go-Viet, the Indonesian company is challenging Singapore-based Grab’s dominance in south-east Asia’s fastest growing economy, which is already home to more than a dozen small, local ride-hailing companies.
While Grab operates under one brand in eight south-east Asian nations, Go-Jek chose to go local, using the Go-Viet brand for its Vietnamese operations, a decision made after “massive debate” in the company, according to Nadiem Makarim, Go-Jek’s founder and chief executive.
The name Go-Jek derives from the Indonesian word for the country’s ubiquitous motorbike taxis, “ojek”. While that has made for a “powerful and sticky” brand in Indonesia, Mr Makarim thought it would not resonate in the Vietnamese market. Hence, Go-Viet was chosen, along with a red jacket emblazoned with a star for drivers’ uniforms, a look that mirrors the national flag.
“Our principle is, consumer first,” Mr Makarim said in an interview with the Nikkei Asian Review. “And if consumers will embrace a brand that they think as their own, and it’s special and it’s part of their identity like Go-Viet, then that’s even better.”
This article is from the Nikkei Asian Review, a global publication with a uniquely Asian perspectives on politics, the economy, business and international affairs. Our own correspondents and outside commentators from around the world share their views on Asia, while our Asia300 section provides in-depth coverage of 300 of the biggest and fastest-growing listed companies from 11 economies outside Japan.
Go-Jek has chosen to brand its services as Get in Thailand, a market it will soon enter. “Let’s give each country the ability to not only determine their own destiny, but also determine their own identity,” said Mr Makarim.
He stressed that the brand was already working, saying that Go-Viet has grabbed 35 per cent of the market for two-wheeled ride-hailing in Ho Chi Minh City, the country’s business and financial hub, following its soft launch there less than two months ago. The app has been downloaded 1.5m times.
But Mr Makarim admitted that interoperability is not yet available for Go-Jek and Go-Viet users, who must download two different apps to use the services in Indonesia and Vietnam. This puts it at a disadvantage to Grab’s single app, which can be used across borders.
Nevertheless, partnering with Go-Viet, which was established in March, is expected to give Go-Jek more freedom to expand in the country.
Nguyen Vu Duc, Go-Viet’s co-founder and chief executive, said the company planned to offer additional services currently available only to Indonesian users, with car hailing, food delivery and mobile wallet Go-Pay at the top of the list.
“We also will provide Go-Shopping, on-site cleaners and beauticians in your home,” Mr Nguyen said. “All of these will be rolled out in Vietnam based on market demand.”
Meanwhile Grab, currently available in 36 Vietnamese cities, has been facing regulatory hurdles to further expansion after assuming the operations of rival Uber, which exited south-east Asia in April.
Uber’s legacy in Vietnam still lingers, however, with some former Uber executives having joined Go-Viet, including Mr Nguyen. Go-Viet is also attracting former Uber drivers and customers.
Thanh Hung, who used to be an Uber driver in Ho Chi Minh City, said he originally tried working with Grab following Uber’s departure, but was turned off by the working style. “After Go-Viet launched in Vietnam, I registered to work with them,” he said. “I’m happy, and many other ex-Uber drivers are also working for Go-Viet thanks to the company’s good driver policies,” which he said include a better commission.
Former Uber customer Lan Huong said she loved the Uber app. “After Go-Viet launched, I tried [their app] and saw the company as a good alternative, as their fares are still cheap,” she said. “But more importantly, some Go-Viet [drivers] told me that a lot of ex-Uber drivers are now with Go-Viet, so they are supposed to provide the same services.”
Go-Jek’s arrival appears to be pushing Grab to improve its Vietnamese operations. The company is reportedly offering drivers better incentives and launched food delivery in May, the same month Go-Jek announced its $500m expansion plans to Vietnam, Thailand, Singapore and the Philippines.
On September 11, just a day before Go-Viet’s official full launch, Grab announced a “strategic partnership” with Hanoi-based digital payments service provider Moca “to expand mobile payments more rapidly across the country”.
Mr Makarim, who was friends with Grab co-founder and chief executive Anthony Tan while both were at Harvard University in the US, said that while the “fierce” competition makes it hard to turn a profit in ride-hailing, it has a good side: spurring innovation.
“If it wasn’t for our competition, Go-Jek would not be as motivated to innovate and get this big,” said Mr Makarim. “So really, we’re growing markets together,” he added, explaining that the market is huge and that “the most important thing is actually converting people to the new way of doing things”.
Go-Jek is reportedly making profits from its other services, but not ride-hailing.
Before the announcement of the Go-Viet partnership, Go-Jek claimed 105m downloads of its app in Indonesia and had 1m drivers operating in 144 cities and districts.
Grab claims 8m drivers and agents in 234 cities across south-east Asia and 109m app downloads.
In response to the new competition, Grab said: “We have not seen our market share fall in Ho Chi Minh City since the start of August. In Vietnam, our business continues to grow tremendously. Transport is displaying strong month-on-month growth while our new verticals, such as food and parcel delivery, are growing robustly.
“We welcome competition in the market . . . When done right, competition betters the market,” Grab added.
A version of this article was first published by the Nikkei Asian Review on September 13, 2018. ©2018 Nikkei Inc. All rights reserved.
Get alerts on Asia-Pacific when a new story is published