- By Ritesh Mehta
A nation of 1.3 billion people. 450 million (35%) of them connected to the internet. Rising incomes, cheapest internet access in the world, and increasing interest from the population in going online. This makes India a formidable market for all kinds of businesses who are either digital, internet first, or want a piece of the pie.
Broadly speaking, there are three major players competing for the ₹₹₹ that Indian consumers represent when it comes to their wallets, time spent on internet, or their data. These players are Indian internet companies, US based internet companies, and Chinese internet companies. We aren’t talking about VC firms here — they are investing someone else’s money and hoping that it works. We are talking about companies willing to invest their own money.
Out of the three, India companies are either relying on VC money or hoping that either US or Chinese companies will fund them. Not all of them, but a lot of them fall into this category. Therefore, the real competition is between US and Chinese companies to see who can win the long-term battle of unlocking the value of hundreds of millions of Indians coming online and spending their money, time, and data — whatever that can be monetised.
US companies have the upper hand at the moment — Amazon and Walmart-owned Flipkart rule the e-commerce space. Facebook and Google account for a majority of time spent by Indian internet users, and therefore have access to data that can be monetised. These are the facts that we know so far. Let’s now look at what the future holds. Here are some of the reasons why Chinese companies have a really good shot at dominating the battle in the long run.
- Chinese companies understand India better: While India and China are very different countries (culturally, linguistically, politically, etc), Chinese companies are more adept at understanding the nuances of India and adapting to them. Look at how quickly the likes of Xiaomi, Oppo, OnePlus have captured the Indian cellphone market. While their competition was Samsung, a South Korean company, the Chinese companies were fast movers in understanding marketing, finding the right balance between price and quality, and using strategies like country wide offline stores that felt very Indian to push their brands. They built a retail network by tapping into SMEs who own their mobile shops. The Chinese figured out how to sell in India much faster than any other technology company. Apple is still struggling to establish their foothold, has gotten into regulatory issues, and isn’t growing at the speed that other high-end players like OnePlus are growing in India.
- Chinese companies want to do business, American companies want to save the world: Another way to put this is, Chinese companies are run by founders that put business first while American companies are run by founders that want to build a legacy. Alibaba’s vision is “to make it easy to do business anywhere”. Tencent’s mission is “to improve quality of life through internet value-added services”. It’s clear that these companies mean business. Google’s mission is “to organize the world’s information and make it universally accessible and useful”. Facebook’s mission is “to give people the power to build community and bring the world closer together”. There is nothing there about doing business, or what they sell. This major difference in their missions plays out in real life in what these companies prioritise for. Alibaba has taken significant stakes in companies like PayTM, Zomato, and Big Basket — areas where they dominate in China. No American internet companies have invested in any of the large Indian start-ups in order to make it easier for them to do business or diversify. Instead, American internet companies continue to focus on their narrative of how they are making India a better place. This might be a solid long term strategy (only time will tell), but the Chinese companies are clearly touching Indians across various services through their investments or their own services like TikTok that are widely popular amongst the youth in India.
- Chinese companies are used to regulation: Everything in China is regulated — it has been for years, and it will always be in the foreseeable future. This has prepared the Chinese internet companies really well for India where regulation arrives overnight and is rarely thought through. Because they always expect it, they can move quickly to adapt to regulation. Look at how quickly Alibaba backed PayTM has pivoted to take advantage of either changing regulation or policy void. On the other hand, American tech companies are clearly playing catch up when it comes to regulation in India. WhatsApp payments can help India move into digital payments overnight, but it can’t launch because of lack of regulatory clarity. Google was fined Rs 136 crores for search bias in India by the Competition Commission of India. It’s a safer bet to assume that Chinese companies, with their experience of working around rigid regulation in China and their investments in “Indian” tech companies, will be better placed to deal with India’s half-baked tech regulations that will arrive in the next few years.
This is, by no means, a guaranteed outcome. The US tech companies can learn these lessons quickly. They can start writing large cheques to invest in Indian tech companies directly, instead of trying to do everything on their own. They can shed their world savior complex and focus on doing business. It will be a tough road, and the Chinese companies will not make it easy for them. Indian tech companies, I am afraid, will have to watch and learn. They haven’t hit the maturity curve yet to compete with the global giants, but they will get there soon. Let’s see who wins the Internet in India — this is going to be an exciting ride.
- Ritesh Mehta is a tech policy consultant, and has spent 14 years at Facebook and Google as an early employee across US and India.