SINGAPORE - Uber Technologies Inc will redeploy 150 engineers from its China operations to other key markets such as Southeast Asia after agreeing to sell its business in the world's most populous nation, according to people with direct knowledge of the plan.
But China's ride-hailing service Didi Chuxing's victory over Uber may provide a playbook for Thai and regional rivals to fend off the biggest US ride-hailing company.
The San Francisco-based employees will develop new features such as mapping as it boosts services for the region that includes Thailand, Singapore and Indonesia, the people said, asking not to be identified as the matter is private.
Didi Chuxing said Tuesday it will buy Uber's operations in China, putting an end to a year-long war between the world's two largest ride-sharing companies.
Didi had a head start and maintained the lead on Uber with a strategy that other rivals may emulate, analysts and investors said.
The China deal will also allow Uber to free up capital to double down on putting resources into other markets and hire more engineers locally in India, the people said. Uber has a total global workforce of about 8,000, spanning engineering, marketing and operations.
Uber declined to comment.
Uber's shift is a sign it won't let up in its battle for customers elsewhere in Asia even after reaching a peace deal for China. The world's most valuable start-up competes with Singapore-based Grab for ride-hailing customers in Southeast Asia, a region that also includes Malaysia and Vietnam, while also tackling Go-Jek in Indonesia and going head-to-head with Ola in India.
Didi is in an alliance with Grab, Ola and Lyft Inc that unites four rivals to Uber. It's not clear what impact the China deal will have on that alliance.
Among those closely watching Didi's acquisition is Grab, the dominant Southeast Asia ride-hailing start-up that competes with Uber in countries including Singapore and Vietnam. Grab says it has 95 percent market share in third-party taxi-hailing services, while its private-car business has about half of the Southeast Asian market.
"Our investor and global partner Didi has effectively won the battle for market share dominance in China," Grab CEO Anthony Tan wrote in an Aug 1 memo to staff. "We have seen that when the local champion stays true to their beliefs and strengths they can prevail," he wrote.
"With the deal in China, we expect Uber to turn more attention and divert resources to our region," according to the memo. "They've lost once, and we will make them lose again."
Grab operates in 30 cities across six countries including Thailand.
"Grab knows very well what Didi is doing in China and is replicating that," such as offering transit options beyond personal car services, said Hans Tung, managing partner at GGV Capital, which has invested in both Grab and Didi.
Having raised more than $15 billion and valued at $68 billion, Uber has a long bench of investors from venture capitalists and hedge funds to sovereign wealth funds.
Since its inception in 2012, Grab has raised at least $680 million, based on disclosed information, with investors including Vertex Venture Holdings, Tiger Global Management, Hillhouse Capital Management, SoftBank Group, China Investment Corp and Didi.
Under the Didi deal, Uber and its backers will have a 20% economic interest in China's largest ride-sharing company. Didi is also investing $1 billion in Uber.
Didi made moves that may serve as a guide for other Uber competitors on its way to building a juggernaut that gives customers more than 14 million rides each day.
"It's an encouraging sign for local competitors that they can, in fact, compete and that local strategies are required for local markets," said Dane Anderson, a vice president at research firm Forrester. "For Southeast Asia, the key message they can take away is that they can compete with Uber and that Uber will have to prioritise as well."
"Didi had a much bigger presence on China social media," said David Chao, general partner at DCM Ventures, which invests in China.
Uber eventually got backing from Chinese conglomerate Baidu, but by that time Didi had overtaken it.
"Uber joined the party a little too late," Chao said.
Didi also started its business focused on taxi-hailing, allowing it to overtake Uber China in its number of drivers, since Uber relied on privately owned cars in China, where vehicle ownership has historically been low. Didi has expanded to buses, chauffeurs and other services.
Still, Uber's loss in China could make it a greater threat elsewhere, as it focuses its efforts and money. The billions of dollars it was spending to compete in China can now be aimed at other markets.
"Our engineering efforts are going to be deployed to India and Southeast Asia. Manik Gupta, (Uber's head of maps) was in India recently, we're going to be making that product better," said a person close to Uber, who didn't want to be named.
Rivals are wary already.
"With the deal in China, we expect Uber to turn more attention and divert resources to our region," Grab's Tan warned in his memo.