Uber records loss in China, but big profits in Vietnam

VietNamNet Bridge - The CEO of Uber, Travis Kalanick, said that Uber lost more than $1 billion per year in the Chinese market while participating in the price competition with its rivals. However, in Vietnam, Uber is working very well.

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The director of Uber Vietnam, Dang Viet Dung, said that Vietnam was one of the focus markets with the highest growth rate in the world.

Within five years, the waiting time per trip has dropped to four minutes. According to Uber Vietnam, every 5 seconds, this unit received a request from passengers.

"With young people accounting for over 50% of the total population, Vietnam is considered a dynamic market, which quickly promotes growth of technological applications," he told Zing.

Although he was confident about the Vietnamese market, he did not disclose the specific revenue of Uber Vietnam.

Uber is surrounded by many competitors such as traditional taxi companies, and Grab, the service offering the same platform as Uber.

For example, the two largest taxi firms in Vietnam - Vinasun and Mai Linh - have released a Vinasun App and Mai Linh Taxi App. Grab also gives more support to the driver and passengers, with the launch of super cheap fare services.

Some passenger transport and taxi associations have proposed to ban Uber operations in Vietnam. Uber is also “charged” with operating as a disguised taxi firm, committing tax evasion and performing illegal activities, causing social disorder.

Most recently, the Department of Transportation and the Tax Department of HCM City reported that every day Uber Vietnam transferred about VND1 billion (nearly $50,000) profits to the Netherlands. The money is deducted from 20% of revenue of Uber taxi. An official of the HCM City Tax Department said the agency would go to the end of this case.

Uber representatives only said they always supported fair competition because this factor helps market development as well as improve.

Uber is confident to create a "revolution" in the mode of urban transportation and optimize economic resources.

For partners (the drivers), Uber confirmed, after each trip, they will receive 100% of all service revenues made to the application.

The 20% that the drivers have to pay is the cost of technology provision service and it will be reinvested in technology, marketing, human resources, infrastructure, and other items.

In addition, the service charge paid by credit cards of 3-5% by international card organizations is also included in the 20% charges Uber collects from its partners. Uber will bear full risk of credit card fraud.

However, the operational and policy changes of Uber related to its partners have received reactions from the users and partners.

Recently, a celebrity complained of being overcharged by Uber service. And the policy change encountered reactions from drivers. After striking, these partners chose other applications.

Nguyen Khac Giang, from the Vietnam Economic and Policy Research Institute (VEPR) said that, the challenge of Uber in Vietnam is similar to that in other markets in the world.

The biggest hurdle in Vietnam is the lack of legal framework for taxi service on a technology platform. Uber also has to confront two big rivals in the market.

Firstly, in relation to consumption habits, the elderly are not ready to use the Uber app. Besides, cash payments are still popular in Vietnam.

Secondly, the formidable opponent of Uber is Grab. While Uber directly confronts with taxi companies, Grab links with them.

But, according to Giang, Vietnam is still one of the markets with the highest potential in the world for Uber because Vietnam has a young population and is one of the top countries in Asia for urbanization.

With high-speed urbanization, traffic will increasingly expand and demand for travel will rise, creating opportunities for a technology-based company in the field of transport.

In addition, the Vietnamese economy has generally overcome the first phase of crisis to be gradually stabilized and the people's income is rising steadily.

As predicted by the Boston Consulting Group (BCG), Vietnam is a country with the highest growth of the middle class and the wealthy in Southeast Asia, which is expected to reach 33 million people by 2020.

Demand for travel by car may increase. This will be an advantage for transportation service firms.

In Vietnam, the cost to purchase and use a car is relatively high. Therefore, people will prefer to use Uber service.

This advantage is only available in some countries that protect the automobile industry and the luxury consumption industry as Vietnam.

But this advantage will diminish in the next five years when the ASEAN Economic Community (AEC) takes effect fully.


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