"Mai Linh can think of merging with Uber Vietnam"

By Duong Nguyen - Oct 09, 2017 | 03:12 PM GMT+7

TheLEADERRecently, the Mai Linh taxi-booking application has added M.Bike and M.Bike Premium features. Can this new move put an end to the slack period under the pressure of Grab and Uber?

"Mai Linh can think of merging with Uber Vietnam"
Tran Bang Viet, the former CEO of Mai Linh Taxi (Photo: Gian Phuc)

A subsidiary of Mai Linh Group - Mai Linh Mien Bac (Northern Region Mai Linh), is asking for their shareholders’ opinions in adding another business line: motorcycle taxi (referred to as moto-taxi). Can this new move help the company survive the downturn?

TheLEADER talked with Tran Bang Viet, former CEO of Mai Linh Group and incumbent CEO of Dong A Solutions, on this topic.

In your opinion, is the addition of moto-taxi function to help Mai Linh win customers from Uber and Grab or just to help it survive in the stagnant traditional taxi sector?

Tran Bang Viet: The demand for public transportation is relatively high in urban areas. In the northern region, the people are more sensitive to prices. Even Uber and Grab also have to set the price at the competition with small taxi companies here. As a consequence of the cumbersome system and the inability to reduce prices, Mai Linh has gradually lost its competitiveness in this market.

Waiting for the result from applications takes quite a long time and may reduce the revenue from the high-end segment. Therefore, entering the market of technology moto-taxis is a brilliant move. Mai Linh can pilot the new system and model, attract a new customer segment, and directly attack the competitors.

Apparently, Mai Linh is trying to keep the high-end segment but not the cheap and changeable customers. Also, Mai Linh attracts lower-end customers for a loyal segment in the future while still developing technology apps to reduce costs and increase business efficiency.

Mai Linh has added moto-taxi booking feature in their app and offered the same price for this service with Uber and Grab. Will it be useful in the event of consumers having been too familiar with Uber and Grab since late 2014?

Tran Bang Viet: They cannot help diverting their operating model to applying technology for survival. Adding the moto-taxi feature does not increase costs; it offers more choices for customers.

I think that is sensible. Of course, the implementing process should be watched more closely.

Grab and Uber always launch big promotion packages, sometimes offering users a nearly free ride. Should Mai Linh follow this tactic?

Tran Bang Viet: Grab and Uber want to enter the market and the customers’ mind as well as cultivate the habit of using new services for them. Mai Linh, on the other hand, has had a market, so they should pay attention to quality and efficiency rather than just trying to attract more customers. Therefore, promotion packages should be used smartly.

What else do they need to do to support this new business line?

Tran Bang Viet: Remember that operation management is the key to success. New strategies and products need to be consistently implemented and added into the existing system.

They should also pay close attention to customer experience and remember that the greatest enemy comes from the inside, not from the outside.

In fact, along with launching the moto-taxi service, Mai Linh has taken bold steps to restructure. In the first half of 2017, Mai Linh laid 6,000 employees off to cut costs. Mai Linh also announced it would buy 20,000 electric cars from Dimora Enterprises Company of America, which was building an electric car factory in Thanh Hoa, Vietnam. Previously, they also piloted the taxi booking apps. How do you assess the impacts of these efforts on their resurgence in the market?

Tran Bang Viet: Redundancy and restructuring are beneficial if the company follows the right direction and does not affect their core strength. Using electric taxis, coupled with good investment and operating costs, will also significantly alter their operational performance. Regarding the production of electric cars, I declined to give any comments.

Do you think that Mai Linh should cooperate with Grab or Uber in some fields to co-exist? If yes, what fields do you recommend?

Tran Bang Viet: The chance for cooperation is small, as Grab does not need to do so and Uber will gain more advantages over Mai Linh, especially in the long run.

However, Mai Linh can think of merging with Uber Vietnam and use their technology system to exploit the market more effectively. Based on my observation, Uber seemingly wants to withdraw from the Vietnamese market.

Thank you!