Carl Urzo is one of the two geeks from Southeast Asia to make it to Pioneer, a programme run by Daniel Gross and funded by Marc Andreessen

Clark Urzo grew up in a not-so-good neighbourhood in a Philippines village. And his childhood was filled mostly with bad memories that he wants to forget in life.

The first major shocking event occurred when he was just four or five years; one of his neighbours was brutally killed in a shootout in front of his house. But it was just a beginning. When Urzo turned eight, he and his mother had to move to a police camp, as his father was bad with money management. However, he fought all odds to achieve something that many of his peers couldn’t really conquer.

“Statistically speaking, I shouldn’t be here,” Urzo tells me. “Don’t get me wrong: the Philippines is not as lawless and hopeless a land as is usually portrayed in the media. After all, I was able to go to a decent school and eat three square meals a day until I was old enough to forgo buying lunch to fatten up my piggy banks. But it wasn’t the most ideal setup, I guess, and I thank the lucky collusion of coincidences and opportunities that allowed me to survive to this day.”

Urzo, now 23, is one of the two entrepreneurs from Southeast Asia to win the Pioneer tournament —  a programme launched by Daniel Gross (whose startup Cue was acquired by Apple in 2013) and funded by Marc Andreessen and Stripe to discover the “lost Einsteins” of the world.

Also Read: How a lazy student who caught and sold spiders transformed himself into a successful founder

Urzo was selected for creating a new programming language, which enables anyone who can code to contribute to serious physics research (for example, simulations of gravitating systems). This opens up the field to the wondrous forces of Open Source and promotes open and accountable science along the way.

The “itch” inside

From a very young age, Urzo was compulsively curious; he would see something and tinker with it until it yielded to “kid logic”, or otherwise he would be off reading books about topics that were frankly a bit over his head.

“We had this stack of encyclopaedias at home about magnetism, dinosaurs and star charts, and I read them all as best as I could. I also played pretend-scientist a lot when I was a kid, and I’m lucky I didn’t burn my entire neighbourhood down in all the times I toyed with fire and flammable substances,” he laughs.

Urzo learnt about computers while toying with gaming consoles. When he was about six, his older brother taught him how to use the ‘memory card’ of a PlayStation I, and from there he started doing all sorts of weird things to all the computers he could find.

“I got hooked especially on ‘cheat codes’ and I remember getting absolutely stumped as to why entering random hexes into the hulking machines translated into infinite money for my role-playing game characters. It was a pretty interesting (and oftentimes frustrating) ride, going from computer experimentalist to technician and the graveyard of PCs I’ve bricked is testament to that journey,” Urzo walks me through his early life.

“Eventually I learnt to code in Python when I was 12 and rediscovered my love for the sciences one year later, when I couldn’t advance in Algebra I. I had trouble grokking the concept of plotting equations when I first encountered them, so in response I discovered BetterExplained.com and found one of his really intuitive explanations of how you can get areas of figures by dividing them up into rings or bars (which is really Riemann summation in disguise),” he goes on.

In the ninth grade, he moved to a new school to curb some of his hyperactivity problems. It was a single-sex school which simultaneously operated as a seminary. “My mum couldn’t really afford to send me to a school abroad, so I opted to stay here. I decided to major in Physics instead of Computer Science (my university doesn’t allow double degrees). In the freshman year, I got wind of the whole Oculus Kickstarter and ordered from one of the first post-Kickstarter batches. Eventually, this led me to the folks over at VR Philippines, whose founding members roped me into starting a company with them.

Thus Urzo co-founded his fist company when he was just 19.

Applying for Pioneer

Urzo’s startup applied to 2018’s Y Combinator’s Startup School. Around this period, he encountered a headline ‘Lost Einsteins’ when he was looking for success stories (It was the American economist Raj Chetty, who first used this term, which refers to geniuses who would have been able to do great things had they been exposed to opportunities in the right way).

“‘Lost Einsteins’ was an interesting observation. Given the sheer abundance of talent in the world, where are all the geniuses — the groundbreaking scientists, artists, engineers, entrepreneurs?,” Urzo wonders.

“There was a paper I read way back, that looked at the variation in mathematical talent across countries as measured by performance on the International Mathematical Olympiad (IMO). I realised two things : 1) IMO scores reflected the underlying distribution of mathematical talent in the country, not a mere success-begets-success dynamic, and b) there was a pernicious disparity between the intellectual productivity of high-income countries vs middle-to-low income countries,” he says.

Urzo figured that it is part of a really telling pattern of absence in the modern world, like, given other plausible socioeconomic forces like the fact that high-performing people tend to clump together (in universities and other institutions where problem-solving and/or ability to compete for prestige is highly valuable), and the fact that there are very serious winner-take-all effects in various industries, like how Silicon Valley is literally three times bigger in terms of available venture capital than the next startup hub which is New York —all of these effects should lead to cities full of these Einsteins. “But we see none. And as the data suggests, it’s largely a structural problem.”

Also Read: How the son of a humble watch repairer became the owner of a multi-million dollar realty tech startup

This is when he heard about Pioneer, which is on a mission to discover the lost Einsteins of the world.

What is Pioneer?

Pioneer was started early this year. According to Founder Gross, the Pioneer programme was created to tackle the uneven distribution of wealth and opportunity around the world; using software and internet scalability to reach high-potential outsiders no matter where they may be.

“I started Pioneer in an attempt to build a community for people who feel the way I do about the world. It’s an attempt to find the most brilliant people in the world, wherever they are, and to identify cheap and scalable interventions that might help them achieve their goals. I want to provide some of the non-intuitive benefits of Silicon Valley to many more people,” says Gross.

Pioneer has been intentionally designed without strict application criteria. People all over the world can submit an idea (across any discipline) and compete in a four-week tournament to rapidly advance their startup/research/project/idea. Pioneers share weekly updates detailing the progress of their projects, allowing the community to upvote the projects that move on to the next round.

“Those at the top of the leaderboard get a final ranking from a panel of mentors—including people like Marc Andreessen (Andreessen-Horowitz), Patrick Collison (Stripe), and Balaji Srinivasan (Coinbase)—and the highest-scoring applicants become Pioneers. The selected cohort of Pioneers receive a grant of US$5,000 (with the option of receiving a US$100,000 investment), an additional US$6,000 in Stellar lumens, as well as a round-trip ticket to San Francisco to connect with one another and relevant mentors. A new tournament starts every four weeks. For the December Tournament, winners will also receive US$100,000 in Google Cloud credits and a cash grant of US$1,000,” he explains the process.

Pioneer’s first tournament attracted applicants from more than 100 countries, ranging from 12 to 87 years old, claims Gross. “We believe the world has thousands — maybe millions — of ambitious people who have the talent and creativity and just need a nudge of support to unlock their potential. Our mission is to scalably identify and nurture the creative outsiders of the world.”

In Gross’s opinion, traditional institutions like the Ivy League try to solve this problem by relying on a small set of individuals to screen thousands of applications. This doesn’t scale, he claims. And it leaves many geniuses (especially those from non-traditional backgrounds) undiscovered.

Also Read: Infightings, quitting of key people didn’t deter this entrepreneur from realising his dream

“We’re trying something radically different. We’re trying to find these “Lost Einsteins” by building an online game — Fortnite, for productivity. Players are rewarded based on the progress they make on their project. Every month, we fund the best with a cash grant, return-ticket to Silicon Valley, and up to US$100,000 in follow-on investment,” Gross continues.

Long-term benefits

“The biggest help would be the financial security from the US$5,000 grant,” Urzo says. “My country has been hit by the worst inflation crisis in recent memory and all my bills have skyrocketed as a result. With US$5,000 in the bank I wouldn’t have to worry about going without food on some days and getting my internet cut off.”

“That said, the network of Pioneers has also served as an avenue to meet interesting people. Interacting with others doing ambitious stuff, getting constructive criticism on your projects, occasionally hearing about sudden low-hanging fruits like conferences, all of these have network effects that will only scale as the number of Pioneers grow. And of course, the success of Pioneer will also help us people from low-income countries to have a shot at improving our quality of life significantly and permanently, allowing us to pursue more ambitious projects in service of humanity,” Urzo concludes.

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Spearheaded by Alipay-NUS Enterprise, the challenge grants S$140,000 reward for top innovation tech startups delivering social impact in Southeast Asia

A rising number of emerging startups are placing social impact at the heart of their entrepreneurial pursuits, finding ways not only to balance financial sustainability between tech investments and providing, say, tangible humanitarian aid—but actually utilising tech in order to amplify the impact and reach of that aid.

In more traditional enterprises like agriculture, returns can be amplified through establishing efficient and easy access between goods and consumers through farm-to-market roads. The same line of logic applies to other pre-existing industries.

Tech can be used not only to enrich products and services in creating impact, but also to streamline systems and deliver results faster to the right people.

Trends among social impact startups in Southeast Asia

Tech startups premised largely on social impact are cropping up in different places all over Southeast Asia.

A recent example is Singapore-headquartered startup, Positive Energy, which is a blockchain-based renewable energy finance platform, seeking to revolutionise the energy-funding process by streamlining the deployment of renewable energy assets around the world.

With Positive Energy’s initiative, green investments are made faster, more liquid, and more economically viable for all relevant stakeholders.

Another one is Warung Pintar, an Indonesia based social venture that provides micro and small businesses easy access to digital tools powered by IoT and data analytics.

Warung Pintar is built around the vision of eradicating massive income gaps through providing equal entrepreneurship opportunities to those who belong in the fringes of society. In the span of less than a year, Warung Pintar has digitised 1,000 kiosks across the greater parts of Jakarta.

Also read: Disobedience as a necessity for success, especially for social innovation

These are mere examples of how tech startups across Southeast Asia with social impact at the center of their businesses have been performing in recent history, overcoming obstacles like sustainability issues that often surround social impact startups.

More than providing grants and other forms of financial support, what budding social impact startups can gain in order to really drive their mission across is a spectrum of help ranging from mentorship, financial aid, key insights on business sustainability, and other similarly important components.

Initiatives that nourish tech startups to create social impact

All support when combined, will not only allow startups to execute their ideas, but also to rigorously polish and streamline those ideas.

This is what ultimately led to the creation of the Alipay-NUS Enterprise Social Innovation Challenge, a partnership between Alipay, the world’s largest mobile and online payment platform operated by Ant Financial Services Group (Ant Financial), and NUS Enterprise, the entrepreneurial arm of the National University of Singapore (NUS).

With examples such as expansive educational opportunities for low-income children, housing development in underprivileged communities, and even care programmes for the elderly and the disabled, the Alipay-NUS Enterprise Social Innovation Challenge aims to identify and support startups in Southeast Asia—particularly Singapore, Malaysia, and Indonesia—that use digital technology to foster a more inclusive society.

“We understand that we can’t do it all by ourselves,” said Geoff Jiang, Ant Financial VP and General Manager of Technology and Business Innovation Group, “because the impact of one company may be limited, but when we build an ecosystem of partners with a shared vision, we will be able to achieve much more.”

Also read: Can social impact be growth hacked?

As part of the Challenge, Ant Financial and Alipay have been facilitating the sharing of ideas and experience on leveraging digital technology for social impact, organising roadshows in various cities in the region.

During the Indonesian roadshow, Keith Zhai, Ant Financial’s Head of Corporate Development for Southeast & South Asia, shared the story of Ant Forest, one of the company’s CSR platforms. By May 2018, Ant Forest had encouraged more than 350 million users to lead a low-carbon lifestyle, planting over 55 million trees in China’s arid regions and reducing more than 2.8 million tons of carbon emission.

In the Malaysian roadshow, Alipay’s Senior Algorithm Engineer Xin Guo explained to social entrepreneurs how he and his team developed the idea of using AI to help insurance companies reduce their costs of claims handling by over RMB 1 billion.

This initiative saved claim adjusters 750,000 hours of time through the automation of the claims process, and most importantly, reduce car owners’ average waiting time of claims handling from 30 minutes to just a few seconds.

 

Singapore and Indonesia as breeding grounds for social impact startups

Now exactly what makes these countries the best places to start? We have seen a number of Southeast Asian startups from Singapore, Malaysia, and Indonesia show promising ideas that fit precisely what the Alipay-NUS Enterprise Social Innovation Challenge is looking for.

Singapore is currently home to Hapticus, which has created a virtual transportation hub for sectors with special needs (similar to an “Uber” service especially for those with disabilities). Hapticus is already operating domestically and is in the process of expanding regionally.

In Malaysia, a social enterprise called Soara Industries uses technology to drive social change by providing access to safe drinking water through the use of a compact water purification design, and basic solar lighting in rural and marginalised communities.

Also read: Startups should focus on creating social impact, plus insights on fundraising, unicorns, and traffic from Scoutedby CEO

Meanwhile in Indonesia, Endapo is a travel platform that fosters environmental consciousness through their “green urban lifestyle” system, operating as a form of green technology with their paperless processes. They also provide reusable bags as a means to endorse the green lifestyle.

These are only some of the existing social impact startups that use cutting-edge technology not only to foster societal inclusivity that ultimately impacts the world, but have proven that sustainability is the best path to take for social entrepreneurship.

 

Opportunities for tech startups that focus on social impact

“NUS Enterprise helps innovators scale their efforts and maximise social impact, through our strong support ecosystem and extensive entrepreneurial networks, which include mentors, impact investors, corporate CSR teams, capacity builders, and community partners,” said Professor Wong Poh Kam, NUS Enterprise’s Senior Director of the NUS Entrepreneurship Centre.

With a chance to win S$140,000 in cash prize, the Alipay-NUS Enterprise Social Innovation Challenge also offers important business insights, plus the unique opportunity of obtaining training, mentorship, and support for growth anchored on financial sustainability while achieving massive social impact.

This means more than just the cash reward, social impact startups will stand to gain commitments from both NUS and Ant Financial to fully realise their visions.

Together, NUS and Ant Financial challenges you to partner with them in creating lasting and sustainable social impact for Southeast Asia and the world.

Have an innovative idea that harnesses digital technology for social impact? Sign up for a chance to receive funding and support to bring your idea to the next level.

 

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Disclosure: This article is produced by the e27 content marketing team, sponsored by Alipay-NUS Enterprise

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The funds will be used to accelerate the development of its model EST-X, a fully-electric and intelligent motorcycle

Singapore-based EuroSports Technologies (EST), a developer of next generation electric motorcycles, announced today it has received S$2 million (US$1.5 million) in seed capital from its parent company EuroSports Global (ESG), with a commitment of another S$3 million subject to certain milestones.

The funds will be used to accelerate the development of its model EST-X, a fully-electric and intelligent motorcycle. It is initially slated to launch in Southeast Asia, which represents a massive initial target market for the startup, with 200 million motorcycles and regional sales of 15 million units per year right on our doorstep.

After its successful launch in this region, the company will follow up with an international debut

“By launching this new electric motorcycle, EST aims not only to deliver a dramatically better mobility experience for end users but also help alleviate the world’s air pollution problem,” said Joel Chang, COO of EST, which has just come out of stealth mode.

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According to the World Health Organisation, air pollution is the number one cause of premature deaths in low-and middle-income Asian countries, accounting for 88 per cent of these fatalities. Globally, air pollution is estimated to kill a shocking seven million people per year. Vehicle emissions are a major cause of this, including those from scooters and motorcycles which remain mostly gasoline powered and highly polluting.

“Air pollution is clearly a health crisis globally. By encouraging societies to switch to electric motorcycles, we can help alleviate the problem. Electric motorcycles are cleaner, easier to maintain given fewer moving components, and cheaper to use over their lifetime compared to gasoline motorcycles,” added Chang.

ESG is Singapore’s distributor of ultra-luxury automobiles and is the exclusive distributor for Lamborghini.

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It’s clear that the cross-border e-commerce industry in China is becoming more and more complex

The article Top 10 predictions for China cross-border e-commerce in 2019 was written by Don Zhao for TechNode.

TechNode Editor’s note: A version of this article originally appeared on Azoya Consulting’s website.

It has been a great year for the cross-border e-commerce industry in China. It’s clear that the cross-border e-commerce industry in China is becoming more and more complex. Brands and retailers will have to choose an appropriate market entry model, and be more targeted in their marketing efforts. This means narrowing down what kinds of customers they want to reach, as well as what kind of brand image they want to convey to them.

However, the government’s support for the cross-border e-commerce industry remains strong and policies are likely to be further relaxed. All in all, we remain positive on the outlook for the industry and think that 2019 will be a year in which many new opportunities will arise. Brands and retailers who remain flexible and open-minded will be best positioned to succeed.

That being said, the competition is heating up and brands and retailers are finding it increasingly difficult to differentiate themselves in a crowded market.

Here is Azoya Consulting’s Top 10 predictions for the industry in 2019:

1. Chinese government will continue to lower tariffs and restrictions on cross-border e-commerce 
What’s going on: China is expanding the scope for cross-border e-commerce because cross-border e-commerce (CBEC) can be better tracked and taxed, when compared to gray-market daigou purchases. It also makes it easier to protect consumers from fake/shoddy goods. The recent limits on CBEC purchases have been expanded to RMB5,000 (around US$75) per transaction and RMB 26,000 (US$3,800) per year, up from RMB2,000 (US$291) and RMB20,000 (US$2,900), respectively. In November, taxes on inbound postal shipments for the top two tax brackets were reduced to 25 per cent and 50 per cent from 30 per cent and 60 per cent, respectively.

Implications: Expect the government to relax more restrictions on the industry and expand its scope.

2. The ‘consumption upgrade’ trend in China will continue to power cross-border e-commerce growth
What’s going on: Despite concerns over the slowing economy, young professionals in Tier 1-2 cities will continue to spend on higher-quality imported products, specifically those that can enhance one’s health and aesthetics. AliResearch showed that average spending on Tmall Global was more than RMB550 (US$80) for Tier 1 cities, up from RMB400 (US$58) in 2014. Cosmetics and skin care take up almost 40 per cent of total sales on Tmall Global, up from less than 25 per cent in 2014, according to figures from consultancy Deloitte. Similarly, Hong Kong Trade Development Council (HKTDC) also expects the health food market in China to grow to RMB300 billion (US$43 billion) by 2021 from RMB237.6 billion (US$34 billion) in 2017.

Implications: Demand for cross-border e-commerce imports will remain strong. Brands marketing healthy, natural products will continue to be in demand.

Also Read: Alibaba to facilitate cross-border e-commerce trade between Malaysia and China

3. Niche-focused categories will continue to emerge as Chinese consumers become more sophisticated 
What’s going on: In the past, Chinese consumers have flocked to the same well-known brands that everyone else buys. Now, as consumers become more sophisticated they are beginning to consider long-tail products that do a better job of catering to a specific need or function. Examples include Chinese women adding more steps and products to their makeup routines, and more niche sub-categories such as probiotics emerging within the health & nutrition category.

Implications: It might be more beneficial for foreign brands to start focusing on smaller niches where there may be less competition.

4. New and creative marketing tactics will continue to emerge
What’s going on: To differentiate oneself in a competitive market, brands have to come up with unique ways to connect with customers and build their loyalty. Brands are mixing e-commerce with games, live streaming, short videos, and more to stand out from the crowd. Some recent examples include L’Oreal livestreaming Chinese influencers at the Cannes Film Festival on its WeChat mini-program, and Dior designing a Tetris game to promote its lipstick products.

Implications: Brands should think more carefully about how to make themselves stand out from competitors.

5. Daigou will split into two groups and some will exit the market completely
What’s going on: China’s new e-commerce law is forcing individual sellers on WeChat and Taobao to obtain business licenses and file tax returns. This includes daigou agents using personal accounts to sell online. Other smaller daigou may forego selling and become micro-influencers, helping larger daigou organisations market products on WeChat, getting a commission in the process. Many daigou may exit the market completely.

Implications: All in all, expect the quality of daigou agents to improve, the supply of goods to shrink, and more consumers to purchase from official cross-border e-commerce channels.

Also Read: Indonesian cross-border e-commerce portal WeShop raises 7-digit funding from NextTech and Haspro

6. More retailers may leave large marketplaces like Tmall Global and consider other alternatives
What’s going on: Large e-commerce platforms such as Tmall Global, JD Worldwide, and Netease Kaola are procuring their own inventory directly from brands, and stocking them in bonded warehouses closer to China. This means that Tmall Global can provide lower prices, faster logistics, and stronger customer experience. Third-party retailers selling the same brands on these platforms will find it difficult to compete on price and logistics and may launch their own independent websites instead. Macy’s is one retailer that has left the China market after closing down its Tmall store and official China website.

Implications: Expect more retailers to leave Tmall Global, JD Worldwide, etc.,  and launch their own platforms.

7. Customers’ expectations for faster shipping times will become higher and higher
What’s going on: The large cross-border e-commerce platforms are purchasing more inventory directly and stocking them in bonded warehouses in China and Hong Kong. JD.com has pledged to purchase RMB 100 billion (US$14.5 billion) in imported goods, and Kaola announced its plans to spend three billion Euros on European goods last year. Because they are stocking more inventory in warehouses closer to China, shipping times are being reduced drastically, raising customer expectations.

Implications: There will be more pressure on other brands and retailers to ship packages quickly. Those with clear, predictable demand should stock more inventory in Hong Kong or Chinese free trade zones to keep up.

8. Smaller e-commerce platforms will continue to fall into Alibaba’s and JD’s orbit
What’s going on: E-commerce is becoming more competitive as Alibaba and JD can provide lower prices, wider product selections, and faster shipping when compared to smaller competitors.
Smaller players are partnering with Alibaba and JD because they have stronger operational capabilities (logistics). Alibaba and JD are partnering with smaller platforms because they are niche-focused and do a better job at marketing to certain audiences. Examples include Little Red Book (Xiaohongshu) contributing product reviews to Taobao and Farfetch partnering with JD.com.

Implications: Expect Alibaba and JD.com to make more investments in the e-commerce space as growth slows and they look for additional channels to drive traffic.

Also Read: Cross-border e-commerce: Delivering beauty from Korea

9. Marketplace platforms such as Tmall Global, JD Worldwide, and Netease Kaola will set up more offline cross-border e-commerce stores
What’s going on: Offline retail is good for driving brand awareness amongst potential customers who may not normally purchase cross-border e-commerce products. JD’s latest experience center in Chongqing is one offline cross-border e-commerce store that’s opened in recent months. Customers can browse and test out products at the store, and the products are shipped from bonded warehouses within the same day.

Implications: Expect more of these stores to open up as the big players seek to expand their reach. However, these stores are likely to be limited to well-known brands, as opposed to emerging ones.

10. Cross-border WeChat shops built on mini-programmes will grow in popularity
What’s going on: For small brands, WeChat stores are a cost-effective way to build a China e-commerce presence without paying large upfront fees for marketplace platforms or setting up an official Chinese website. For big brands, they can be used for different functions such as launching limited collections, livestreaming makeup tutorials, or designing creative games.

Implications: Smaller brands based overseas will enter the China e-commerce market through WeChat mini-programmes, though traffic will still be hard to drive. Expect bigger brands to design more creative marketing campaigns and mini-programs to differentiate themselves from the pack.

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The article Top 10 predictions for China cross-border e-commerce in 2019 first appeared on TechNode.

Image Credit: h heyerlein on Unsplash

The post Top 10 predictions for China cross-border e-commerce in 2019 appeared first on e27.

The verdict marks the end of an 18-month-long trial, in which Vinasun accused Grab of unfair business practices

Vietnamese taxi firm Vinasun’s Christmas present may have come a little late, but it has been vindicated nonetheless, as today, it has emerged victor in a lawsuit against ride-hailing giant Grab.

The People’s Court of Ho Chi Minh City found Grab guility of operating as a taxi company and has therefore violated regulations in the country; Grab currently operates in Vietnam as a technology provider.

Grab has been ordered to pay a VND 4.8 billion (US$208,000) fine to Vinasun to compensate for the losses that the latter has suffered as a result of what it described as “unfair business practices” by Grab.

This sum, though, is a lot less than Vinasun’s original demands, which was VND 42.2 billion (US$1.8 million).

The verdict marks the end of an 18-month-long trial — dragged on by a series of hearing postponements and suspensions — between the Southeast Asian behemoth and one of Vietnam’s key taxi companies.

Vinasun had accused Grab of being disingenuous about the true nature of its operations in Vietnam; it claimed that Grab used its hefty war chest to poach large numbers of drivers and attract riders to its platform. Because of this, it said Grab upended the taxi market and dealt a significant blow to the Vinasun’s bottom line.

Grab said it intends the appeal the court’s ruling, and added that it is preparing to launch a defamation lawsuit against Vinasun and other companies who had colluded with the taxi firm if they do not retract the allegations.

“Today is an extremely unfortunate day for technology and foreign investment in Vietnam where clearly, innovation is no longer seen as a virtue,” said Jerry Lim, Country Head of Grab Vietnam, in an official statement.

“It contradicts the Vietnamese government’s pursuit of its Industry 4.0 and digital economy ambitions. Vinasun’s anti-competitive tactics have succeeded only in stifling innovation,” he added.

“E-hailing has come so far to become an indispensable part of people’s lives and the industry shouldn’t be forced to take a giant step backwards to now conduct itself and provide its services similar to that of traditional taxis,” said Lim.

The basis of Vinasun’s lawsuit

In an official statement published last month, Vinasun laid out its grievances with the ride-hailing giant and asserted why the company should claim damages.

Vinasun claimed that Grab’s status in the country as a provider of connection management services for “contract-based transportation” (in other words, a private ride-hailing platform) is a mere guise; in reality, the company is operating as a “complete taxi business”, it said.

Because of this, Vinasun claimed that Grab had breached its original agreement with the Vietnamese government, which had placed Grab under a private ride-hailing service innovation pilot project called Decision 24.

By running a full-fledged taxi business, Vinasun said, Grab has to be subjected to regulations under the taxi operating license, which go beyond the company’s current obligations as solely a software provider for private transportation. Because of this, Vinasun believes that Grab is exploiting loopholes in the legal system to avoid coming under taxi laws.

“Vinasun fully agreed with the representative of the Ho Chi Minh City People’s Procuratorate at the hearing on October 24, 2018, confirming the convincing evidence that clearly demonstrates that Grab operates as a complete taxi business with tariff, charge, promotion, discount, reward and fine … with clear evidence,” read Vinasun’s statement.

“Grab, as a taxi business, managed to escape 13 taxi business conditions, thereby hiring a huge number of drivers, has resulted in Grab violating Decision 24 … in addition, there are other issues such as customer data management, customer confidential information, penalties, insurance for drivers, etc,” it said.

Vinsaun added that Grab employed a “loss-making strategy”, offering monetary rewards to entice drivers to come onboard its platform. This would effectively enable Grab to get rid of any competition and dominate the market.

It also said that Grab failed to inform authorities of its promotional deals and discounts, and overextended the length of these promotions — a violation of the country’s trade law — with approval.

For Grab’s alleged violations, Vinasun is demanding the company compensate for losses as a result of reduced income to the sum of VND 42.2 billion (US$1.8 million). The company appointed Cuu Long, an Inspection Valuation company, to act as an independent assessor for the damages incurred.

“The lawsuit will not only bring about fair competition for businesses as well as promote and protect the legitimate rights and interests of the Vietnamese business community,” Vinasun declared, “but also contribute to the completion of related policies and laws related to the enterprise and the business environment so as to ensure the long-term sustainable development of the country and the real benefits for consumers.”

Grab’s position

Grab has maintained that its operations and business activities do not fit the legal definition of a transport business; that it merely provides a software to help transport companies conduct business.

The company said that the Ministry of Transport has even reaffirmed its status as a software provider.

In a legal argument document prepared by Grab’s lawyers, it said “the Department of Transport of Khanh Hoa stated that ‘GrabTaxi Limited is a software provider, not a transport business, however, the functions and goals of the transport business are still performed by GrabTaxi.’”

It added that the ministry said that would be “no change in the draft [of the Pilot Project]” denoting Grab as a software provider, and that any transportation-related activities it conducts are ‘only meant to support the transportation units on the basis of business cooperation contracts.’”

This portion of Grab’s argument is pretty telling:

“In fact, Defendant (Grab) could not assign a driver to a particular trip in the way that taxi companies dispatch their cars.  Defendant’s app works in the following manner: when a car is requested, the app will alert the drivers who are closest to the passenger.

At that moment, the driver has full autonomy to consider accepting the trip with the suggested fare calculated by the app and the first driver to accept the passenger’s request will provide the ride. Therefore, Defendant does not interfere in any way with this process and does not in any way manage or dispatch cars; rather. Defendant only facilitates rides between drivers and passengers through the use of technology.”

Grab also disputed that Vinasun’s claim that its loss of income was due to uncompetitive business tactics employed by Grab; rather, it said that Vinasun had every opportunity to innovate new solutions — based on Scheme 24 — and compete on the same level.

“All the reasons cited leading to so-called ‘damages’, and the so-called ‘effects’ on the business of Vinasun flow from technological progress and reform spearheaded by the Government, in turn led by the Prime Minister through the authorization of the Pilot Project rather than any violations, such as cars without ‘taxi signs’ on top,” said Grab, in an official statement.

In a press statement, Jerry Lim, Grab’s Country Head of Vietnam, said that “Vinasun has been and continues to be given an equal opportunity under Decision 24 to compete on fair grounds with 8 other players who have been granted an e-hailing pilot licence by the government to operate e-hailing services in 5 cities and provinces.”

Lim said that Vinasun itself has already developed an app as part of the pilot programme for its taxi and car-hailing service.

Grab also expressed doubts on Cuu Long’s credibility and ability to accurately measure the damages. It also remarked that even Vinasun’s management had acknowledged that the company’s reduced income could have been attributed to a slew of factors unrelated to Grab.

“At the General Meeting of Shareholders of 2017, the management of Plaintiff [Vinasun] acknowledged that ‘The company faced a lot of challenges, such as gasoline price changed 22 times, falling demand, increasing costs such as insurance cost and increase salary of nearly 13 per cent,” it said.

Other macro trends affecting the company’s stock prices and market capitalisation such as economic policy, politics or micro factors like market trends and investor behaviours should also be taken into account, Grab argued. It described Cuu Long’s claim that Grab’s entry into the Vietnamese market was the sole cause of Vinasun’s reduced market cap as “baseless”.

“[This] is is completely baseless and simply non-scientific from an economic
perspective; this is a reflection of Cuu Long’s fundamental lack of expertise regarding the stock market, particularly market capitalization …It is unacceptable to pick the difference between market value and book value at a particular point in time to calculate damages” said Grab.

Grab’s woes are not over. The Vietnamese regulator has recently ruled that the company breached anti-competitive laws when it acquired Uber’s assets in the region.

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