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Go-Jek and Grab begin race for regional dominance in Vietnam

Rivals up their games as ride-hailing and related services grow in Southeast Asia

Go-Jek, through its partnership with Go-Viet, appears to have forced Grab to upgrade its services in Vietnam. (Photo by Akira Kodaka)

HANOI -- The fierce competition between Southeast Asia's leading ride-hailing service Grab and its Indonesian rival Go-Jek is set to explode across borders as the latter rolls into Vietnam with plans for further regional expansion.

Go-Jek, whose services were until recently confined to Indonesia, on Sept. 12 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 Southeast Asia's fastest growing economy, which is already home to more than a dozen small local ride-hailing players.

While Grab operates under one brand in eight Southeast Asian nations, Go-Jek chose to go local, using the Go-Viet brand for its Vietnamese operations -- a decision made after "massive debate" conducted within the company, according to Go-Jek founder and CEO Nadiem Makarim.

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, 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," Makarim said in an interview with the Nikkei Asian Review on Sept. 12. "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.”

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," the CEO said.

Makarim claims that the brand is already working, saying that Go-Viet has grabbed 35% 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 1.5 million times.

But 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.

Go-Jek founder and CEO and Nadiem Makarim is primed to challenge Singapore-based Grab's supremacy in the Southeast Asian ride-hailing market. (Photo by Akira Kodaka)

Nevertheless, partnering with Go-Viet -- established in March -- is expected to give Go-Jek more freedom to expand in the country. Go-Viet co-founder and CEO Nguyen Vu Duc said the company is planning to offer additional services that are 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," 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 Southeast Asia in April.

Uber's legacy in Vietnam still lingers, however, with some former Uber executives having joined Go-Viet, including Nguyen. Go-Viet is also attractting former Uber drivers and customers.

Thanh Hung, once an Uber driver in Ho Chi Minh City, said he originally tried to work 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," saying that these 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 explained. "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 that Go-Jek announced its $500 million expansion plans to Vietnam, Thailand, Singapore and the Philippines.

Moreover, on Sept. 11, just a day before Go-Viet's official full launch, Grab announced a "strategic partnership" with Hanoi-based digital payment service provider Moca "to expand mobile payments more rapidly across the country."

Makarim, who was friends with Grab co-founder and CEO Anthony Tan while both were at Harvard University in the U.S., 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," Makarim said. "So really, we're growing markets together," 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.

Prior to the announcement of the Go-Viet partnership, Go-Jek claimed 105 million downloads of its app in Indonesia and had 1 million drivers operating in 144 cities and districts.

Grab claims 8 million drivers and agents in 234 cities across Southeast Asia and 109 million app downloads.

In response to the new competition, a Grab spokesperson 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," the spokesperson added.

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