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Mobility: Hyundai and Samsung Grab Opportunities in SE Asia

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Unlike in South Korea, where taxi drivers, mobility players and lawmakers are yet to reach a consensus on the boundaries of the ride-sharing economy, Southeast Asia is a haven for mobility players like Gojek, Grab and Uber. 

South Korean conglomerates have been waking up to the importance of the growing ride-sharing market beyond the peninsula, prompting chaebol (family-run conglomerates) like Hyundai Motor and Samsung Electronics to invest in companies such as Grab, Southeast Asia’s largest mobility service provider.

Grab offers various on-demand transport services including private cars, motorbikes, taxis and carpooling, as well  food and package delivery services. It was announced on Mar. 25 that Grab is to grow even further by acquiring Uber’s Southeast Asian division.

So what do South Korean conglomerates hope to achieve by investing in Grab?

Hyundai Motor, South Korea’s largest automaker, signed a strategic partnership (read: investment deal) with Grab in January 2018, signalling its desire to provide “a new mobility service platform that will utilize Hyundai’s eco-friendly models such as the IONIQ Electric.”

This is not the first time that Hyundai has targeted overseas mobility services with its IONIQ model. So why Southeast Asia this time?

“Hyundai is not doing well in China and the United States. It needs to break into new markets but its presence in Southeast Asia is minimal because the region is dominated by Japanese companies,” said Samsung Securities analyst Esther Yim. “Toyota Motor Corp, China’s Didi Chuxing and Softbank had already invested in Grab. Hyundai is a bit late.”

Meanwhile, Samsung Electronics’ overseas woes could have prompted the company to invest in Grab “given its massive decline in China, stalled growth in many developed Western markets and its many challenges in India with Xiaomi hot on its heels,” according to TuanAnh Nguyen, an analyst at research firm Canalys.

As part of the MOU, Samsung will supply its car infotainment system, consisting of tablets placed inside cars for passengers to watch, to Grab taxis, as well as offering financing systems allowing Grab drivers to purchase Samsung smartphones and tablets at discounted prices in the near future.

“As cheap and value-for-money devices from competitors such as Oppo, Vivo, Huawei and Xiaomi flood the Southeast Asian market, Samsung is preventing a large number of users (drivers/ riders) from buying smartphones from competitors,” said Nguyen.

Ride-sharing companies like Grab and Uber are expected to become one of the most important markets for self-driving cars, because the cost of the technology is likely to deter mass adoption by regular consumers early on. As Hyundai Motor and Samsung Electronics have been pumping money into developing autonomous car technology, they need partners like Grab as both sources of data and potential adopters of self-driving vehicles.

“Hyundai wants data [regarding] Southeast Asian drivers’ driving patterns,” said Yim.  

The question of a future clash between GrabPay and Samsung Pay naturally arises. Grab revealed few details in this regard but has stated that the two companies will work together to expand into the region’s “fragmented mobile payments ecosystem.”

“We do see an opportunity for Samsung Pay to be an official partner for GrabPay in Southeast Asia,” said Nguyen. As of now, Google Pay and Alipay are only the major mobile payment platforms available for users to top up their GrabPay mobile wallets or pay for Grab rides.

“Given Grab’s large number of users (bigger still after the Uber deal), and Samsung’s large base of users in Southeast Asia, it has been a missed opportunity for Samsung Pay, which is already available in all the major Southeast Asian markets,” said Nguyen.

Although Samsung outshines Apple in most Southeast Asian markets except Singapore, it’s still too early to forecast how each mobile payment service will evolve in the region, particularly as most of its economies are still largely cash-based. However, given the rapid evolution of the shared and mobility economies, this situation could also change fast.

 

Cover Image: A driver (or rider) of Grab with Samsung smartphone. (Source: Samsung Newsroom

Juwon is a journalist at Korea Exposé covering all things business. She’s previously worked as a TV producer in Channel News Asia in Singapore and has interned for Bloomberg, AP and Google. Juwon is a proud owner of her dog Noah and a graduate of Journalism and Media Studies Centre at the University of Hong Kong.