Over the years, it is clearly seen that China is very interested in India. This can be easily seen with the help of the large investment made by the Chinese companies in the Indian Start-up ecosystem. In India, China’s tech giant companies and venture capital funds have made a big Chinese investments in India – largely in tech start-ups. These investment are made on evaluating some of the parameters which are acting as the ultimate success for the Chinese investing forums. They are:-
- Value of Equity Invested- according to the business model.
- Target Companies- according to the USP and the Similarity with other start-ups.
- Location of investment for better acquiring the customers.
- Nature of business- depending upon the people interest and other direct and indirect investment techniques.
Present Scenario of Chinese Investment in Indian Startups
Present scenario of Chinese Investment in India: Over the years, it has been seen that the Chinese start-up companies are getting a great success in the Indian market. TikTok, owned by ByteDance, is already one of the most popular and most downloaded app in India and the world, overtaking YouTube.
Xiaomi handsets are bigger than Samsung and Apple smartphones. The companies are having a large customer base making themselves the market leaders in their sectors respectively. All these Chinese start-ups are working behind the Indian start-up by providing the investment to these Indian start-up companies in the Indian start-up ecosystem. Chinese investment in Indian tech start-ups is making an impact disproportionate to its valuation, by deeply penetration of technology across sectors in India.
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The statistics of the past years says, Oyo and Ola and many more. Indian Unicorns with Chinese investors are counted as 18 out of the 30 . This means that China has embedded itself deeply in the Indian ecosystem which is helping them in getting the large profits.
The Chinese companies and venture firms made the investment in about two dozen Chinese tech companies and firms which are having more scope of success according to them. These investing giants consist of the companies and firms like Alibaba, ByteDance and Tencent, which are completely established in the market and earning the great profits. These Chinese Companies have invested their money in about 92 Indian start-ups, including some of the unicorns such as Paytm, Ola, Dream 11, Byju’s and many more.
Division of the Chinese Investors
Chinese investment in Indian Startups are categorized in two groups. These Chinese investment in Indian Startups have made these companies a giant in the Indian startup ecosystem. They are:-
1) Chinese VC funds, such as CDH Investments, Ward Ferry, SAIF Partners and Hillhouse Capital, mostly based in Hong Kong. They are akin to professional global investors, such as Sequoia or Softbank, and look for a bigger financial returns according to the investment.
2) Tech giant companies, like Alibaba, Tencent and Xiaomi, which want a serious presence in the Indian market, just as Walmart (via Flipkart) and Amazon do but in a virtual manner without any burden.
Biggest Chinese Investments in Indian Startups
| ALIBABA GROUP | SECTORS |
|---|---|
| Dailyhunt, Healofy, Paytm Mall, Paytm.com, TicketNew, Vidooly, Xpressbees, Snapdeal, Zomato | E-commerce, Search Engine, Media, Social Media & Entertainment, Logistics, Fintech, Aggregator, Others |
| TENCENT | SECTORS |
| Byju's, Ola, Doubtnut, Dream 11, Flipkart, Niyo,Ganna, Mike, Khatabook, MXplayer, Mygate, Pine labs. Pocket FM, Practo, Swiggy, Udaan | Education, Logistics, Gaming, E-commerce, Media, Social Media & Fintech, Aggregator, Others |
| XIAOMI | SECTORS |
| City Mall, Hungarna Digital Media Entertainment Pvt. Ltd, Marsplay Internet, Oye!, Rickshaw, Rapido, Sharechat ,Zesty Money | E-commerce, Fintech. Aggregator, Media, Social Media & Entertainment |
Some of the big Chinese firms investment in the Indian startups ecosystem are:-
Funding by Chinese VCs
| Shunwei Capital | Hillhouse capital | Fosun Rz Capital | GGV Capital |
|---|---|---|---|
| $ 9.4 Million Pratilipi | $ 13.2 Million epiFi | $8 Million DotPe | $24 Million Vedantu |
| $ 7.9 Million Sim Sim | $70 Million Car Dekho | $1.2 Million Loca | $36 Million Rupeek |
| $ 5.9 Million Kuku FM | $585 Million Udaan | $11.2 Million Delhivery | $25 Million Khata Book |
This shows that the Chinese investors and VC firms are keenly observing the the Indian startup ecosystem and this can be easily proved by the above statistics which tells that these Chinese VCs are investing almost in all the Indian startups during their initial period of their startup. This Small-Small investment in almost all the startups has now become big amount in total.
Reasons behind the Chinese Investments in Indian start-ups
These Chinese companies are investing in such companies mainly due to 3 reasons. They are:-
Difference in the Currency Value
It is clearly seen that the Chinese currency is having the higher value than the Indian currency. The Chinese currency is almost 10 times larger than the Indian currency. This is the main point behind the Chinese investment in Indian start-ups.
This creates a plus point for the Chinese investors as, they have to invest less while investing in the Indian start-ups as compared to any Chinese investment.
Secondly, these Chinese companies investment in Indian start-ups having a similar concept eg: Alibaba invested in Paytm. This helps the Chinese investors to make a trade of technologies with the invested start-up. So, the Chinese investors are able to get their invested in one or the other form plus also gets the partnership in the start-up with the help of the shares they purchased, which ultimately acts ROI for these investors.
Data of the Indian Users
It is the well-known fact that data is the new oil. Chinese companies such as Alibaba and Tencent have their own ecosystems which are ready for use. This includes the online stores, payment gateways, messaging services, and many others.
These Chinese investors can pull the data of the Indian users. This can be done with the help of the position in the company (due to the investment) which can ultimately leads us to the loss of control over data. This data can be used in many ways and in different situations depending on the need of attraction of the customers having similar taste. This data has its own value in the market and after the loss over the data, there will be no privacy left for the existing customers of the service.
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Restriction over the Platform Control
China is having a very large amount of restrictions over the companies which do not belongs to the Chinese state. China is having a closed internet service or the Chinese internet service which almost act as an intranet. This restricts outsiders and is closely monitored and controlled by the state. Many companies like Facebook, are banned in China and other companies working in China like Apple, have to undergo many restrictions.
Due to this many Chinese companies like Alibaba and Tencent are able to get all the benefits of this system. By restricting access to foreign players, China is able to create its own working surfaces. So, these Chinese investing companies and firms are trying to replicate their internet ecosystems in India. Once, they are able to get success in this task then they will be able to dominate over the Indian market which will directly affect the world’s market.
Chinese Investment in Indian Startups - FAQs
How many Indian startups are funded by China?
As per conducted surveys, it has been founded that 18 out of 30 Indian startups are funded by Chinese Investors. This means that China has embedded itself deeply in the Indian ecosystem which is helping them in getting large profits.
Is BigBasket funded by China?
Yes, BigBasket is funded by Chinese Investors - Alibaba. Recently, BigBasket has received funding of $50 million from Alibaba.
Is Flipkart funded by China?
Flipkart till now has received $7.7 billion from multiple investors and talking about Chinese Investors, Flipkart has received around $300 million from investors like Tecent and Steadview capital.
Author: Yash Gupta
Source : https://startuptalky.com/chinese-investment-indian-startups/
Date : 2020-09-22T10:40:00.000Z