The one lesson every Southeast Asian company should learn from Didi Dache and Kuaidi Dache

Image credit: Beijing Today

In probably one of the biggest unicorn mergers of all time, earlier this year, Kuaidi Dache and Didi Dache, China’s biggest taxi hailing apps merged. Purportedly, Fan Bao, the founder of China Renaissance, one of China’s first tech advisory firms, “[persuaded] the founders they were reducing their own equity as they tapped cash from outsiders to escalate their rivalry.”

Fan Bao’s advice was taken to heart by the two Chinese juggernauts and the companies went on to raise another US$2 billion. Uber scared them so bad, they had to do it. It was either merge or cannibalize each other.

What this means for Southeast Asia

South of the border, things are heating up. The ecosystems are still nascent, and this is exactly why companies like Lazada are keen to swoop in and dominate. This will only continue as multinational well-financed startups come in to grab marketshare where local Southeast Asian companies are lackadaisical.

If we are to believe the common assumption that what happens in China precedes Southeast Asia by 5 to 15 years (depending on the country), then the region better watch out. This is even more exacerbated with most Southeast Asian countries not taking the anti-outsider stance that China does with its Great Firewall.

The lesson here is clear. Southeast Asian companies should start thinking or planning for market consolidation. It’s already wreaking havoc in countries like Vietnam (my area of expertise) where not enough market consolidation has left too many small companies fighting over the pieces. I imagine the same is true in throughout the region.

Merge or wither away, pick your poison. But either way, lose the ego.

Editing by Malavika Velayanikal