Boycott China? Dragon now angel for Indian startups
BENGALURU: ‘Boycott China’ messages may have become routine on WhatsApp in India. But in the startup world, India and China are drawing closer.
Chinese firms 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.
Ecommerce 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 funding in messaging app Hike; prior to that, it led a $90 million round in healthcare solutions firm Practo and, through its joint venture with South Africa’s Naspers, invested in online travel firm Ibibo Group.
“There are demographic similarities and both countries are seeing consumer growth for digital firms. Also, Chinese players+ have experience in market creation and running successful digital companies, so they can play a bigger role than being just financial investors,” says Ashish Kashyap, founder of Ibibo, which last month merged with rival MakeMyTrip. Alibaba, for instance, is seen to be actively helping Paytm in various aspects.
Bhavin Turakhia says the Chinese understand the Indian market better than US companies do as the Indian market is on the same evolution path as that of China, but about 5 to 10 years behind.
Chinese companies and funds have become big investors in Indian startups+ . 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.
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 is in China.
What’s pushing the 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 down.
So they want to use their surpluses to expand into what is potentially the world’s third largest digital market.
“There are only two big growing markets where they can invest: India and the United States. Silicon Valley does not respect Chinese capital. So the Indian tech sector becomes attractive to them,” says Mohan Kumar, executive director at Norwest Ventures, a US-based venture fund that has operations in India. Kumar also notes that Chinese investors often value Indian startups at three to five times more than what other seasoned investors do. “So entrepreneurs naturally prefer them,” he says.
Higher valuations mean the Chinese investors take lower stakes for the same amount of investment, and founders can hope for an even higher valuation in their next round of fund raising.
Language and politics are a challenge. May be for that reason, the Chinese are for now preferring partnerships and not outright buys. Even investment firms are building partnerships. Chinese VC fund Incapital has tied up with Indian fund IvyCap Ventures to enable its partner investors to have a closer look at potential investment opportunities in Indian startups.
China is showing interest in traditional industries too. In July, Chinese pharma company Shanghai Fosun Pharmaceutical Co acquired Indian injectables manufacturer Gland Pharma for $1.27 billion, and in August, Chinese conglomerate Jiangsu Longzhe Technology and Trade Development Co acquired Diamond Power Infrastructure, Vadodara-based manufacturer of cables, conductors, transformers and other power sector equipment, for $125 million. But digital technology looks to be where the biggest action is.
中国企业也将目光投向传统领域。7月，中国制药公司上海复星医药公司以12.7亿美元收购了印度注射剂制造商Gland Pharma。8月，中国江苏龙喆科技贸易发展有限公司以1.25亿美元收购了Diamond Power Infrastructure。Diamond Power Infrastructure位于瓦多达拉，生产电缆、导体、变压器以及其他电力设备。但数字技术行业仍是中国企业最青睐的投资领域。(实习编译：孙亚晖 审稿：谭利娅)
24 3 Reply
Support our local industries even if it may be costlier otherwise “East India company” will come from china this time and slevery is sure..
9 1 Reply
already chinese import is one major contributors to deficit…..now they will come in India to hurt our economy
8 0 Reply
TRUTH BE TOLD
There is 1 thing common between Indians and Chinese – Greed for money! boycott Chinese goods sounds ambitions but a lot of people will not sacrifice their selfishness.
6 0 Reply
2 days ago
china is is cheat , pro-terror
biggest liar in d world
not trusted by any1 in d world
4 0 Reply