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Kalanick Resignation Just the Latest Detour for Uber in Asia

Chased out of China by a local rival, ride-hailing giant faces more of the same in India and Southeast Asia

Uber’s office on the outskirts of New Delhi last year. After retreating from a costly battle in China last year, the company raised its bet on India.

Newley Purnell in New Delhi,

Liza Lin in Shanghai and

Dan Strumpf in Hong Kong

Updated June 22, 2017

Travis Kalanick’s ouster as chief executive of Uber Technologies Inc. dealt a potential blow to its efforts in Asia, where the ride-hailing company is locked in a multibillion-dollar battle with local rivals.

Uber retreated from China last year, selling its business there following a costly battle with homegrown rival Didi Chuxing Technology Co. Afterward, Uber said it was sharpening its focus on India and Southeast Asia. But investors and analysts say the San Francisco company’s worries at home may add momentum to fast-growing startups capitalizing on a home-field advantage, local knowledge and good relationships with regulators.

Mr. Kalanick was critical in turning Uber into a company valued at nearly $70 billion, said investors at Beijing-based Magic Stone Alternative Investments, an Uber investor since 2015.

“The business in which Uber is engaged is an all-out battle, a constant daily battle against city regulators, against taxicab unions,” said Ben Harburg, managing partner at the firm. “Travis, while he had many flaws, greatly personified this warrior ethos and was able to execute on this vision and grow the company at such a pace and such a valuation.”

His departure follows hard on Uber’s firing of its Asia president, Eric Alexander.

Singapore-based GrabTaxi Holdings Pte., known as Grab, led Uber in all Southeast Asian markets except Singapore in cumulative downloads for the 12 months ending in May, according to data from mobile app analytics firm App Annie. Uber did win in India, slipping ahead of Bangalore-based ANI Technologies Pvt.’s Ola. Ride-sharing companies typically don’t disclose rides per day.

“Uber is losing the race in Asia,” said Rushabh Doshi, a Singapore-based analyst at researcher Canalys. “In the two largest markets here, India and Indonesia, Uber is under serious attack by Ola and Grab, respectively.”

In addition to having local connections, Asia’s ride-sharing companies are more agile, can adapt quickly to domestic rules and are ensuring better service to keep driver retention high, he said.

In India, offerings from ANI Technologies’ Uber rival, Ola, include auto-rickshaws, here shown off last year by ANI CEO Bhavish Aggarwal. Photo: Namas Bhojani/Bloomberg News

An Uber spokesman declined to say whether its strategy may change in the region following Mr. Kalanick’s departure.

In India, where the rise of the cheap smartphone is creating millions of potential new customers, Uber has said it is investing more than $1 billion—boosting its mapping capabilities, hiring more engineers and training new drivers. But Ola, valued at $5 billion and backed by investors including Japan’s SoftBank Group Corp. , operates in more cities and says it has more drivers, offering features like auto-rickshaw rides. An Ola spokeswoman declined to comment on Mr. Kalanick’s departure.

A woman who in 2014 was raped by an Uber driver in India is suing the company in the U.S., saying Mr. Kalanick, Mr. Alexander and another top deputy who also left the company breached her privacy by obtaining and publicizing her medical records.

In a statement, an Uber spokesman said: “No one should have to go through a horrific experience like this, and we’re truly sorry that she’s had to relive it over the last few weeks.” Mr. Kalanick and Mr. Alexander didn’t immediately respond to requests for comment.

Southeast Asia, home to more than 600 million people, is another key battleground.

While Uber has tangled with regulators and taxi unions globally, Grab has said it works closely with authorities and even has partnerships with local taxi companies. It has recently expanded to offer mobile payments. Grab is valued at $3 billion and is also backed by SoftBank, among others.

A Grab scooter on the move in Jakarta, Indonesia, in February. Photo: beawiharta/Reuters

“We’re well-positioned to win,” a spokeswoman said, though she declined to comment on Mr. Kalanick.

Another major rival in Southeast Asia is Indonesia’s Go-Jek, a fast-growing motorcycle-hailing startup backed by KKR , Warburg Pincus LLC and others. The company launched its app in 2015 and has expanded to provide food and package delivery, on-demand beauty and cleaning services and more. A Go-Jek spokesman declined to comment.

Uber’s management troubles at home could help Grab and Go-Jek woo drivers and users, said Vishal Harnal, a Singapore-based Partner at venture-capital firm 500 Startups, a Grab investor.

“Grab and Go-Jek are going to be able to do a lot more while Uber has other fires to fight,” he said.

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