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BATX is battling its way into India’s market despite political tensions
China and India have had a fraught relationship since at least the early 20th century. While they may not be able to agree on where their borders lie, it is clear that the two countries are economically important for each other: China has in recent years become one of the fastest-growing sources of foreign direct investment (FDI) for India. China’s tech giants have also been making their way across the Himalayas to the Indian subcontinent at a slow, but steady, pace.
The two countries share many similarities—a huge population, mobile first approach, as well as similar consumer spending habits and income levels. This is why the country of Ganges has proved fertile ground for transplanting business practices from China: Chinese companies have found investment opportunities amid the slowdown in home territory, while Indian startups have been gathering insights from a market that is much closer to them than Western ones.
With the conflict between the countries, companies Chinese companies have been targeted for extra scrutiny by the Indian government over data collection and privacy. How this will affect business remains to be seen, but here is how BATX (Baidu, Alibaba, Tencent, and Xiaomi) have been expanding their footprint so far.
Tencent—Transplanting red packets to India
Tencent has been the most aggressive Chinese player in India’s tech scene. After a failed attempt to market their own messaging app, WeChat, the company has decided to simply transplant their strategy of linking social media with commerce into a popular local app named Hike. After receiving $175 million from Tencent in 2016, Hike launched India’s first in-app mobile payment feature in June this year. Soon after, Indian users got their first taste of the red packet (hongbao, 红包) mania, this time with blue envelopes. The transplant seems to be successful since money gifts play a big role during local festivals.
In April 2017, Tencent has also led a $1.5-billion funding round in e-commerce platform Flipkart, one of Alibaba’s strongest competitors in India. Other investments include healthcare firm Practo, travel site ibibo (which recently merged with Ctrip-backed MakeMyTrip), cab aggregator Ola which is set to receive $400 million, and the latest – ed-tech startup Byju.
Alibaba—Riding the mobile payment wave
Much like Tencent, Alibaba has also tried to transfer its success with Alipay into India by purchasing Paytm, India’s largest virtual wallet provider which is also the second-most valued startup ($7-8 billion) in the country. Paytm and similar services surged after Indian government sudden demonetization in December 2016 which led to chaos.
Alibaba’s stake in the company is currently 60%, and it has spun off its own e-commerce platform, Paytm Mall, much like Alibaba’s Tmall in China. This, along with a $500 million round of financing in online shopping platform Snapdeal, has raised Alibaba’s stakes in India’s rising online retail sector which is estimated to reach $55-60 billion by 2020.
UCWeb, part of the Alibaba Mobile Business Group, has been a strong player in India for some time with India’s most popular browser, UCBrowser. By building its first data center, Alibaba has also entered India’s cloud computing industry which is projected to grow to $1.81 billion in 2017. Other investments include a majority stake in ticketing platform TicketNew through Alibaba Pictures.
Baidu—Sniffing out the territory
Baidu has been much slower in building its presence in India. Nevertheless, the company has several mobile apps on the market and claims that most Chinese apps in the Indian market are already partnered with Baidu.
The company aims to focus on expanding the user base for its apps and providing a better ad platform for businesses than the existing ones. Baidu believes that India is where China was in 2003 in terms of Internet and smartphone penetration which means there is plenty of room for growth. In some areas, India is set to overtake China soon.
Another area where Baidu will focus its attention is content. According to its India head Tim Yang, Baidu will continue its search for promising startup investments.
Xiaomi—Fighting competition in the smartphone market
The smartphone manufacturer has so far seen remarkable success in India, reaching second place in smartphone sales and crossing the $1 billion revenue threshold in 2017 despite stiff competition from both local and Chinese rivals. During 2015 and 2016, Xiaomi invested around $500 million in building manufacturing facilities in India with the help of contract manufacturer Foxconn. The company aims to invest the same amount during the next three to five years.
In April last year, Xiaomi made its first investment in India, leading a $25-million funding round into Hungama Digital Media Entertainment, an online entertainment content aggregator and publisher. The company is also hoping to export its Android-based operating system MIUI to Indian startups working in mobile tech.