The UAE has a ringside seat for the fight between two of the most ambitious new companies in the world. At stake is the title of “disruptive innovator” champion, at least in the highly-competitive business of personal car travel.
In the blue corner is Uber, the San Francisco company that in just six years has become the global market leader in private car hire. Uber has almost reached the enviable stage where its brand is synonymous with the industry, like Hoover or Google.
Analysts now talk about the “uberification” of the business that used to be called “taxi hire”.
Uber is now available in about 67 countries and 300 cities worldwide, and has been valued at as much as $50 billion. Its “riders” (passengers) love the digital ease of ordering a car, the reliability of the service and the classier vehicles it uses.
Along the way, it has made some enemies, including journalists who feel they have been strong-armed by the company, as well as virtually any traditional cabbie in the world. But you don’t get to be global market leader by being nice.
In the red corner is the local boy, the UAE contender, Dubai-based Careem, which since 2012 has been supplying private car hire to an increasing number of cities in the Middle East. It now provides “captains” (drivers) in 22 cities from Morocco to Pakistan.
Although both companies point to what makes its own service unique, the basic idea is the same: why wait on a street corner in rush hour for an old and unreliable public hire taxi when you can use an app to order a mid-level limo and wait in comfort for its arrival to be announced via a smartphone message?
They are also quite proud to be called innovators. At first glance, any business that encourages motor car use does not look particularly innovative or disruptive, but both Uber and Careem point to the fact that they make car use more efficient, by cutting waiting time and promoting pooling schemes, which is a step in the right direction.
One notable point of difference was that Careem did not impose the controversial “surge” charge (read just surcharge) that infuriated some Uber riders during busy periods.
However, Careem had to recently bow to the economic realities of the business by imposing something like its own version of the surge.
Careem had previously taken the extra cost of “captains” in peak periods, and the hit to the profit line, on the chin. But maybe that was regarded as just a little too disruptive.
The provision of app-based services seems to be the focal point of innovative investment at the moment, and both companies have identified new sectors to bolt on to their core passenger business.
Uber is providing helicopters for the Formula One in Abu Dhabi this weekend, and grabbed the headlines by helping Beirut to clean up its garbage mountain recently. It expects parcel and courier services, as well as food deliveries, to be the next big things.
Careem has a service for delivery of cash payments for non-credit card holders that looks like it could be a lucrative business.
What has really added spice to the contest is the fact that both have recently geared up with some big financing. Uber had drawn on the San Francisco billions to the tune of $250 million of investment earmarked for the Middle East over the next few years, while Careem has enticed in a third round of investors to stump up $60m to fund expansion in the broader region.
The anchor investor for Careem was Abraaj, the Dubai-based private equity fund that ranks first by size in the region.
Abraaj, which has a reputation for shrewd investment and has increasingly identified urban markets as top priority, becomes the biggest shareholder in Careem.
The global stage appears set: Uber dominates in America and Europe, while facing big competition from Chinese and Indian rivals to the east.
So the main battleground for the innovators will be the Middle East, with both based in the UAE. It will be fascinating to watch. Seconds out.
fkane@thenational.ae
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A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
Election pledges on migration
CDU: "Now is the time to control the German borders and enforce strict border rejections"
SPD: "Border closures and blanket rejections at internal borders contradict the spirit of a common area of freedom"
Temple numbers
Expected completion: 2022
Height: 24 meters
Ground floor banquet hall: 370 square metres to accommodate about 750 people
Ground floor multipurpose hall: 92 square metres for up to 200 people
First floor main Prayer Hall: 465 square metres to hold 1,500 people at a time
First floor terrace areas: 2,30 square metres
Temple will be spread over 6,900 square metres
Structure includes two basements, ground and first floor
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
Explainer: Tanween Design Programme
Non-profit arts studio Tashkeel launched this annual initiative with the intention of supporting budding designers in the UAE. This year, three talents were chosen from hundreds of applicants to be a part of the sixth creative development programme. These are architect Abdulla Al Mulla, interior designer Lana El Samman and graphic designer Yara Habib.
The trio have been guided by experts from the industry over the course of nine months, as they developed their own products that merge their unique styles with traditional elements of Emirati design. This includes laboratory sessions, experimental and collaborative practice, investigation of new business models and evaluation.
It is led by British contemporary design project specialist Helen Voce and mentor Kevin Badni, and offers participants access to experts from across the world, including the likes of UK designer Gareth Neal and multidisciplinary designer and entrepreneur, Sheikh Salem Al Qassimi.
The final pieces are being revealed in a worldwide limited-edition release on the first day of Downtown Designs at Dubai Design Week 2019. Tashkeel will be at stand E31 at the exhibition.
Lisa Ball-Lechgar, deputy director of Tashkeel, said: “The diversity and calibre of the applicants this year … is reflective of the dynamic change that the UAE art and design industry is witnessing, with young creators resolute in making their bold design ideas a reality.”
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now