In August 2016, DidiChuxing bought Uber China. This was the end of a long and expensive fight for the Chinese ride-sharing market. With their merger, they officially became friends. But only in China. And definitely not in Southeast Asia.

Following the sale of its China business to Didi last week, Uber began immediately refocusing on other regions, with Southeast Asia appearing high on their list. In response, Didi (and Japanese Softbank) almost immediately announced a new fundraising round for their local SE Asia ride-sharing ally Grab.

So Round 2 of the Uber vs. Didi fight started almost immediately. It is in Southeast Asia – and who might acquire Grab just became an interesting question.

My take on this is four points.

Point 1: The view from Beijing is awesome.

Beijing-based Didi now has +95% market share in Chinese ride-sharing, although this depends on how you define the market. China is already the world’s largest on-demand transportation market by far. By ride volume, it is larger than the US, Europe, India and all the rest of the world combined. Of the over 6B trips projected for 2017, Didi will, in theory, have +4B of them. That is amazing.

Didi no longer has any serious domestic competitors. They are sitting on +$10B in cash. Basically, their view from Beijing is awesome. Although changing regulations in China will be an ongoing issue.

Southeast Asia is now an interesting question for Didi. This is not some far-away international market they may or may not want. Chinese businesses are rapidly expanding across Asia. Tens of millions of their customers are already traveling to SE Asia every year. They need to decide if they want or need the SE Asian market. And what if Uber or another foreign competitor captures it instead?

Point 2: Southeast Asia is still an opportunity – but not for long.

Uber is already present in most of SE Asia (Singapore, Thailand, Vietnam, Malaysia, Indonesia, Philippines and others). But they are really only in about 15 cities and they entered most of these in just the past 2-3 years. They are certainly not dominant yet.

Local competitor and Didi-investee Grab (formerly GrabTaxi) has a longer history in the region, having launched in Malaysia in 2012. They are mainly in six countries (Malaysia, Philippines, Thailand, Singapore, Vietnam, Indonesia) and claim 350,000 drivers, 19 million app downloads, +50% of private rides and +90% of taxi-hailing.

But they are also not dominant in the region yet. They are still in only about 30 cities in total and they are by far the smallest of the five main on demand transportation companies globally (Uber, Lyft, Didi, Ola, GrabTaxi). Their latest funding round likely values them at $3B, a fraction of Uber’s $66B, Didi’s $33B, and even Ola’s $5B.

Go-Jek is an interesting new competitor, focusing on motorcycles and rocketing upwards this past year. They remain focused on Indonesia (+250M people) and they claim 200,000 motorbike drivers and several hundred thousand booking requests daily. And they have raised $550M at $1.3B valuation.

Overall, the SE Asia market is still a relatively open market with no dominant player. So if Didi wants to win in SE Asia, there is a window of opportunity.

Point 3: Didi can follow Chinese consumers and companies into Southeast Asia.

Didi has serious advantages in Southeast Asia that should worry both Uber and Grab.

First, SE Asia receives tons of Chinese tourists. Chinese are the single largest tourist group in the Asia Pacific with over 50M visitors per year. Thailand expects about 10M Chinese tourists per year. Indonesia will likely receive +2M. And Chinese tourists are also among the world’s top spending tourists per capita (average $875 each when traveling).

Second, Chinese companies are naturally expanding into SE Asia. China is going global and Asia is the first port of call. You can hear Mandarin and see Chinese signs across SE Asia now. And this is only a fraction of what it will be in 5-10 years.

Third, most of these Chinese tourists and business people already have Didi on their phones. They all definitely have WeChat, a Didi investor with +840M Chinese users. And they are increasingly using Alipay as they travel, another Didi investor with +450M Chinese users.

So Didi already has a big and growing customer base in SE Asia. Didi is now integral to Chinese businesses and the Baidu-Alibaba-Tencent ecosystem, both of which are also rapidly extending into the region.

Point 4: Didi could dominate Southeast Asia.

As we have seen in China, these fights can easily turn into “money wars”, with competitors raising capital and then subsidizing drivers and customers. Grab doesn’t have the capital to compete long-term with Uber or Didi in this way.

Another factor is the ferocity of “Team Didi”. They won in China against strong local competitors. They went head-to-head with global giant Uber. And they have now assembled a team that consists of themselves, Tencent, Alibaba, Baidu and Apple. Team Didi plus $10B could dominate SE Asia if they wanted to.

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I view SE Asia today as mostly a fight between Uber, Didi and Grab. And while Uber and Grab’s plans are clear, Didi’s is still unknown.

So let me pose a few final questions:

Does Didi really need SE Asia?

I think they do. Looking at how SE Asia will grow and integrate with China over the next 5-10 years, I think it a necessary ancillary market. Can Didi be the dominant on-demand transportation company of Asia without SE Asia?

If Didi doesn’t fight for SE Asia, are they ok with Uber taking it?

Didi’s operational tie-in and financial support for Grab may not be enough to stop Uber. If Didi isn’t willing to enter the market directly, I think Uber taking the market is a real possibility.

Conversely, what if someone buys Grab? Uber?

The fight for Southeast Asia could turn into a fight to buy Grab. Didi is already a minority investor so I’m assuming they have some rights in any sales. But what if Uber or Didi were to buy Grab? Isn’t that checkmate for SE Asia?

There are really lots of interesting questions in this situation. Here’s my prediction: Didi will end up end buying Grab. But that’s just a guess.Thanks for reading, -j

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I write (and speak) about how rising Chinese consumers are disrupting global markets. (#ConsumerChina). This also includes work on:

• “China 2025″ – what a region transformed by Chinese consumers, companies and capital is going to look like. (#China2025)
• Photo by Anh Hoang on Unsplash