5 challenges Uber will face as it expands in Asia

Uber originated in Silicon Valley as a solution to a Silicon Valley problem – there weren’t enough taxis in San Francisco, so founders Garrett Camp and Travis Kalanick created a smartphone app that connected the city’s pedestrians with limo drivers who had extra time on their hands.

More than four years later, Uber has expanded to over 40 countries spread across six continents. Its name is now one that is uttered alongside global big guns like Google, Facebook, and Amazon. Moreover, much of the excitement and controversy surrounding the company stems not from its vision of transportation, but for its ambitions beyond it. Given its recent dalliances in corner store deliveries and courier service, its not implausible that UberShop and UberShip will come to fruition in the coming years.

But as Uber begins to move beyond its Mercedes-for-hire roots, it will likely face numerous market-specific challenges. Uber in city A might look totally different from Uber in city B. Below we’ve outlined five challenges that the company will face as expands into Asia and adapts to local environments

1. Can Uber thrive in Asian cities where taxis are already cheap and abundant?

By now, Uber has entered enough second- and third-tier cities all over the world that it’s safe to assume that it wants to be everywhere. As it expands in North America, most US citizens probably wonder how Uber will gain traction in cities where cabs aren’t prevalent because almost every adult has access to a car. Owning an automobile is both a necessity and a rite of passage for most Americans. Uber bears might scratch their heads when they see the company enter Spokane, Washington (population: over 200,000) or Wilmington, North Carolina (population: over 100,000).

But many urban metropolises in Asia (not all) contain taxi markets that differ greatly from cities like Washington DC or San Francisco, where Uber filled a market void that was easy to spot. Let’s run through some rough numbers, just for fun (Note: Some figures aren’t authoritative, but I’ve done my best to take them from generally reliable sources. Population numbers refer to ‘city proper,’ as that’s where cabs are almost certain to be most active).

New York City: 13,437 taxis; population 8.3 million.
Seoul: over 70,000 taxis; population 9.8 million

Chicago: over 6,800; population 2.7 million
Taipei: over 30,000; population 2.6 million

Philadelphia: Over 1500 taxis; population 1.5 million
Kuala lumpur: About 67,000 taxis; population 1.5 million

Tokyo: Over 50,000 taxis; population 13 million

Singapore: Over 27,000 taxis; population 5.3 million.

We’re cherry picking here, and Uber’s success might ultimately rest on more than just taxi availability. Indeed, the company will regularly encourage critics to view it not as a substitute for cabs, but as something entirely different. “It’s not about the market that exists, it’s about the market we’re creating,” Kalanick told the Wall Street Journal. In a lengthy blog post, Bill Gurley of the California-based venture capital firm Benchmark described several alternative use cases for Uber that go beyond “Uber as taxi substitute.” They included – safe transport for kids, safe transport for elders, Uber as a rental car, Uber as a default ride for date night, and Uber as a mass transit substitute (the latter assuming prices stay low enough).

2. What will “big picture Uber” look like in Asia?

3. Will local competitors beat Uber to the punch?

4. Will protectionist policies affect Uber?

5. What will happen to Uber in China?