Chinese Investments in Indian Startups

Boycott China messages may have become routine on WhatsApp in India, reports Times of India. But in the startup world, India and China are drawing closer. Chinese companies and funds have become big investors in Indian startups, and they are becoming particularly useful now as US funds slow down. Beijing Miteno Communication Technology, a Chinese tech conglomerate, made this year's biggest acquisition in the technology startup space - the $900 million buyout of Media.net, a subsidiary of Mumbai-based Directi founded by brothers Bhavin and Divyank Turakhia.

E-commerce giant Alibaba has made large investments in Paytm and Snapdeal. Didi Chuxing, the equivalent of Uber in China, has invested in Ola. Internet giant Tencent recently led a $175-million fun ding in messaging app Hike. Prior to that, it led a $90-million f round in healthcare solutions firm Practo, and, through its joint venture with South Africa's Naspers, invested in online travel firm Ibibo Group.

Cheetah Mobile, which owns products like Clean Master, invested in fitness app GOQii late last year. Ctrip, one of China's largest online travel companies, invested $180 million in MakeMyTrip in January. China-based investment firm Hillhouse Capital has invested in CarDekho. Smartphone maker Xiaomi led a $25-million funding round in content provider Hungama Digital Media Entertainment in April. Web services company Baidu has said it is scouting for investment opportunities in Indian startups.

"There are demographic similarities and both countries are seeing consumer growth for digital companies. Also, the Chinese players have experience in market creation, they have experience in running successful digital companies, so they can play a bigger role than being just financial investors," says Ashish Kashyap, founder of Ibibo Group, which last month merged with rival MakeMyTrip. Alibaba, for instance, is seen to be actively helping Paytm in various aspects of the latter's business.

Bhavin Turakhia says the Chinese understand the Indian market better than the US companies do as the Indian market is on the same evolution path as that of China, but about five to 10 years behind. For instance, China and India are both primarily mobile markets, unlike the US. Even other Asian companies are nowhere close to investing as much as the Chinese in Indian startups. Japan's SoftBank and Singapore's Temasek are among the few non-Chinese ones that have made investments. Taiwan's Foxconn has also made several investments, like in Qikpod, Hike and Snapdeal, but some see Foxconn as practically a Chinese company, given that much of its operations are in China.

What's pushing Chinese tech companies to make large investments are two things: one, many of them are making big profits in their home market, thanks partly to the restrictions on foreign competition; and two, the Chinese economy is slowing. So they want to use their surpluses to expand into what is potentially the world's third largest digital market.

SJP @DigitalAsian - ShareYaar

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