WEDNESDAY, AUGUST 3, 2016 ANALYSIS

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Washington Watch Didi’s dominance over Uber offers roadmap for rivals

By Brad Brooks

hina ride-hailing service Didi Chuxing’s domi- nance of Uber Technologies in the China market Cmay provide a playbook for regional rivals to fend off the biggest US ride-hailing company, especially in Southeast Asia and India. The two companies on Monday confirmed the sale of Uber China to its bigger rival, ending a two-year, money-losing effort to break into one of the world’s toughest markets. Uber leaves with around a one-fifth stake in Didi, but will give up control of its China operations. Didi had a head start and maintained the lead on Uber with a strategy that other rivals may emulate, analysts and investors said. Didi counts two of the most powerful, best capital- ized Chinese Internet companies as backers; has tight connections with local government; made an ally of Trump can’t let go of perceived slights local taxi drivers and expanded into services such as buses that Uber ignored; and exploited its knowledge By Julie Pace awarded a Bronze Star and after his death in attacked” by Khizr Khan. Trump’s unwillingness to let the of local culture and consumers. Uber and Didi declined 2004. Khan said that if Trump were president and enacted matter subside sparked outrage Monday from a chorus of to comment. Among those closely watching Didi’s or , it’s become a familiar pattern. The his proposed temporary ban on foreign Muslims coming to Republicans. Sen John McCain, a former prisoner acquisition is Grab, the dominant Southeast Asia ride- Republican nominee can’t let go of a perceived slight, the US, a position Trump has backed away from in recent of war, said Trump did not have “unfettered license to hailing start-up that competes with Uber in countries Fno matter the potential damage to his presidential weeks, his son would have defame those who are the best among us”. including Singapore and Vietnam. Grab says it has 95 campaign or political reputation. Trump spent the days never been allowed Rep Mike Coffman, a vulnerable Republican in a com- percent market share in third-party taxi-hailing services, after winning the Republican nomination criticizing a US into the coun- petitive Colorado district, said he was “deeply offended while its private-car business has about half of the district court judge’s Mexican heritage. The morning after try. He also when Donald Trump fails to honor the sacrifices of all of Southeast Asian market. accepting the Republican nomination at the party’s con- ques- our brave soldiers who were lost in that war”. Missouri “Our investor and global partner Didi has effectively vention, Trump re-litigated months-old grievances with tioned Sen Roy Blunt said the Khans “deserve to be heard and won the battle for market share dominance in China,” primary rival Ted Cruz. Now, he’s sparring with an American respected”. “My advice to Donald Trump has been Grab CEO Anthony Tan wrote in an Aug. 1 memo to Muslim family whose son was killed in Iraq. and will continue to be to focus on jobs and nation- staff seen by Reuters. “We have seen that when the Republican leaders have urged Trump to drop his al security and stop responding to every criticism local champion stays true to their beliefs and strengths attacks on Khizr and Ghazala Khan, who appeared at last whether it’s from a grieving family or Hillary they can prevail,” he wrote. Grab and Didi formed an week’s Democratic convention and harshly criticized the Clinton,” Blunt said in a statement. alliance with India ride-service start-up Ola and US GOP nominee. It’s not just the optics of picking a fight with However, none of the Republican lawmakers pulled operator Lyft last year, and the Asian companies oper- a military family that has GOP officials eager for Trump to back their support of Trump’s White House campaign. In ate in what could be the next battlegrounds for Uber, move on, but the timing of his attacks: Election Day is just his first rally after a weekend of controversy, Trump spoke said Jeremy Carlson, principal analyst in autonomous three months away. at length and took several questions at an event Monday in driving and mobility at IHS Markit. Those who have worked with Trump say that in private Columbus, Ohio - never once mentioning the Khans. But “Grab knows very well what Didi is doing in China meetings, he can often appear amenable to putting a con- when asked about Khizr Khan on Fox News Channel’s and is replicating that,” such as offering transit options troversy aside. But the businessman can quickly be drawn “Hannity”, Trump responded, “I guess it’s part of my life.” beyond personal car services, said Hans Tung, manag- back in by an interview, especially if he believes he’s “His son died 12 years ago,” Trump added. “If I were presi- ing partner at GGV Capital, which has invested in both already answered the question, or if he grows irritated by dent, his son wouldn’t have died, because I wouldn’t have Grab and Didi. Grab also has powerful regional backers commentary on cable television. “It’s just who he is,” said been in the war, if I was president back then.” that include Japan’s SoftBank Corp, sovereign wealth Stuart Jolly, a former campaign staffer and current political whether Trump backers attending the Ohio rally dismissed the fund China Investment Corp and an arm of Singapore state investor Temasek Holdings. director for the pro-Trump Great America PAC. Trump had issue, underscoring how the businessman was able to sur- Others who have worked with Trump say the only way ever read the vive numerous such firestorms in the GOP primaries. “I Didi’s Road Map to ensure he moves on is to wait for him to tire of an issue constitution. think the Democrats laid a trap for him,” said Tom Because China is a unique market - in population, or get drawn into another matter. Newt Gingrich, the for- Trump responded by McClanahan, a 54-year-old from Johnston, Ohio. “I think regulatory complexity and concerns about foreign mer House speaker who has advised Trump, said the candi- implying Ghazala Khan’s they knew what they were doing when they asked that ownership of big companies - some lessons learned date’s inability to back away from a political land mine religion preventing her family to speak at the convention. They knew he’d there may not transfer to other regions. Still, Didi made “makes him vulnerable”. “His whole experience up until from speaking at the con- respond.” Dale Brown, a maintenance supervisor from moves that may serve as a guide for other Uber com- running for office was in a very combative New York media vention, though she Grove City, Ohio, whose son is in the Navy, said Democrats petitors on its way to building a juggernaut that gives market,” Gingrich said. “He’s been doing it now for over 30 later said talking were blowing Trump’s comments out of proportion and customers more than 14 million rides each day. “It’s an years. It’s a very deeply held habit.” publicly about her had “politicized this by asking that family to speak.” But the encouraging sign for local competitors that they can, in Khizr Kahn delivered an emotional address at last late son was still too dif- real test for Trump isn’t the opinion of the loyal supporters fact, compete and that local strategies are required for week’s Democratic convention, with his wife standing by ficult. On Monday, who attend his rallies. It’s the broader general election local markets,” said Dane Anderson, a vice president at his side. The -born Khan told the story of his son, Trump tweeted that audience, a far more diverse group still weighing Trump’s research firm Forrester. “For Southeast Asia, the key US Army Capt , who was posthumously he was being “viciously readiness for the White House. — AP message they can take away is that they can compete with Uber and that Uber will have to prioritise as well.” Didi consolidated local competition, forming from a merger of China’s top two ride-hailing firms, and it had Nepali workers leave vulnerable families behind the backing of Internet companies Alibaba and Tencent. Those connections enabled Didi customers to hail a ride and pay for it through Alipay, Alibaba’s pay- By Rina Chandran she said. “Migration is increasing the economic and social bans, unscrupulous recruiters just use unregulated chan- ment system, and platform WeChat, vulnerability of the country: people left behind are nels,” said Meenakshi Ganguly, head of Human Rights owned by Tencent. “Didi had a much bigger presence or Nabin Lama, leaving Nepal after his annual home exposed to the harsh economic realities, and it makes Watch for South Asia. Instead, Nepal should monitor on China social media,” said David Chao, general part- leave to return to his construction job in Saudi Arabia them take greater risks, like trusting a trafficker or a kidney recruitment agencies, engage with host countries to ner at DCM Ventures, which invests in China. is not easy. What makes the journey bearable - even tout,” she said. enforce worker rights and ensure embassies provide emer- Uber eventually got backing from Chinese conglom- F enjoyable - is the can of beer he can drink on the flight gency shelters and assistance, she said. erate Baidu , but by that time Didi had overtaken it. from Kathmandu. As soon as the seatbelt sign dinged off Zero Cost A spokesman for the labor ministry said Nepal aims to “Uber joined the party a little too late,” Chao said. Didi on a flight to Mumbai - from where he and a couple of More than 3.8 million permits to work abroad were sign labor agreements with Saudi Arabia and Malaysia to also started its business focused on taxi-hailing, allow- hundred other Nepalis would take a connecting flight to issued in the decade to 2015, representing about 14 per- improve workers’ rights, similar to those already agreed ing it to overtake Uber China in its number of drivers, Jeddah - Lama rose to look for the stewardess. “Beer,” he cent of the current population, according to Nepal’s labor with the , Qatar, Bahrain and South since Uber relied on privately owned cars in China, bellowed, waving to her as she made her way down the ministry. This does not include the hundreds of thousands Korea. “These agreements ensure the rights of our workers, where vehicle ownership has historically been low. Didi aisle with a tray of fruit juice and water. crossing the border into India, where they do not require a minimum pay and other benefits and are effective to pro- has expanded to buses, chauffeurs and other services. “It’s a tough life there. But at least we can earn some- permit. Nepal is forecast by the World Bank to have tect their interests,” Shiva Raj Sedai said. Other companies have played up their local knowl- thing and help our family,” said Lama, 24, one hand on his received about $6.6 billion in remittances in 2015. But the edge. Ola recently acquired a local payments service passport, a white sticker across its green cover identifying a journey to an overseas job is fraught with challenges and Quake Effect Qarth, with connections to Indian banks, to expand the Nepali recruitment agency and his job. “But we can’t drink usually leaves workers deep in debt. The absence of working-age men was felt deeply in the ways passengers can pay. Uber has been criticized for there. So we have a beer on the flight. It feels good,” he said Recruitment agencies that facilitate procuring a job and days and weeks following twin earthquakes in Nepal last launching in China in early 2014 without fully under- with a grin. Lama comes from one of the world’s poorest a work permit often charge 200,000 to 500,000 rupees year which killed about 9,000 people, and damaged or standing the local culture, business dynamics and con- sumers, such as its focus on private cars. “Uber was trying countries. Ongoing political instability since a decade-long ($1,860 to$4,660) per worker. That is several times the aver- destroyed more than 900,000 houses. Women tending to to import some of those ideas that might have worked civil conflict ended in 2006 has discouraged investment, age income of about $730. Fear of losing their job and not children and elderly relatives were often not in a position well in other markets and adapt and move that stuff and hampered growth and curbed job creation in Nepal, forc- being able to pay back the money - usually borrowed from to go to relief camps, claim compensation, or rebuild their apply it to China,” said IHS Markit’s Carlson. — Reuters ing hundreds of thousands to migrate overseas for work. moneylenders, often underwritten by the family home, or homes quickly, said Lily Thapa, founder of Women for Most go to the Middle East, Malaysia and India, from from selling land - forces workers to tolerate harsh working Human Rights in Kathmandu. “Women whose husbands where they send remittances which make up almost 30 conditions and low wages. are working overseas are vulnerable and helpless, particu- percent of Nepal’s annual gross domestic product, accord- “Migration is important - most workers do well, earn a larly during disasters,” Thapa said. “There were many ing to the labor ministry. Most migrants are in low-paid, living, support their families,” Baruah told the Thomson instances of sexual violence after the quakes directed at All articles appearing on these unskilled jobs in construction, or work as security guards Reuters Foundation. “But the very first journey of migration such women,” she said. pages are the personal opinion of and domestic helpers. Many face labor abuses including leads to indebtedness. And they are bonded to their Teaching skills and creating jobs at home will be key to long hours, unsafe conditions and withholding of their employers because of the huge burden of debt,” she said. keeping emigration in check, Baruah said. The govern- the writers. Kuwait Times takes no wages and passports, say activists. Many are trafficked, The Nepali government introduced a “zero-cost” migration ment also needs to prepare for the return of these workers responsibility for views expressed tricked into doing jobs that they did not sign up for, or policy last year, which makes the employer and recruiter in the event of an economic downturn or anti-migrant under conditions and wages far worse than they were responsible for costs. But the law is applied unevenly. laws in the host countries. There is already a slow trickle therein. Kuwait Times invites read- promised. After female domestic workers in the Gulf countries from the Middle East and Malaysia as jobs dry up because ers to voice their opinions. Please Their families are not that much better off. Elderly par- complained of abuse, Nepal in 2012 banned women below of lower oil prices. More than 10,000 Indians in Saudi ents, as well as young women and children left behind in the age of 30 from going there as domestic helps. But Arabia who have been laid off are facing a “food crisis”, send submissions via email to: opin- remote villages are themselves vulnerable to traffickers many women produced fake papers to say they were older Indian officials have said. “Imagine if the 1,500-1,700 men [email protected] or via snail and racketeers, and struggle with everyday hardship. than 30, or were hired for other jobs. Nepal has since low- who leave each day from the Kathmandu airport start “There are hardly any young men left behind in some dis- ered the age limit to 26 years. In June Nepal banned its coming back,” Baruah said. “Imagine what will happen mail to PO Box 1301 Safat, Kuwait. tricts,” said Nandita Baruah, deputy country representative nationals from working in Afghanistan, Iraq, Libya and when they come back to a country where there are no The editor reserves the right to edit at Asia Foundation, an international development organi- Syria after 13 Nepali security guards were killed by a sui- jobs.” For Lama and his friends drinking beer on the flight, sation, in Kathmandu. Families left behind may be duped cide bomber in Kabul. These measures to protect workers that is a distant prospect for now. “I have a contract for any submission as necessary. into sending their children with traffickers posing as aid have had limited success. “We know that when labor-send- one year,” he said. “After that, I will have to find another job workers, or even selling their kidneys in India for money, ing countries try to protect their citizens through such somewhere.” — Reuters