Chinese Technology Firms Rushing to India Face Pitfalls, but Also Surprises

Yicai

2016-12-09

(Yicai Global) Dec. 9 -- India's large and young demographic structure gives China's technology companies the opportunity to replicate their experience here. Huawei Technologies Co., Xiaomi Inc., APUS Development Group Co. and OPPO Electronics Corp. have found fertile soil for growth in India.

A Chinese entrepreneur said in an interview with Yicai Global that he seemed to see the course China underwent after a look at the Indian market. Although minefields litter India's business terrain, surprises can still be found with an adventurous spirit and care.

Commercials for Huawei Glory, OPPO and other Chinese mobile phones are on view here and there in Gurgaon, Jaipur, New Delhi, and other cities in India. To further their commercial interests, China's mobile phone manufacturers, are also helping India to transit to the mobile age.

The mature experience of Chinese entrepreneurs copied in India splits into two types, said Li Tao, chief executive of APUS Group. One is to take root in India (APUS Group, Xiaomi and Huawei are in this camp), while the other is a lighter style of play, which is investment in technology companies in India. For example, Alibaba Group Holding Ltd. [NYSE:BABA] invested in Indian mobile payment platform Paytm, and Ctrip.com International Ltd. [NASDAQ:CTRP] invested in India 's leading online travel service MakeMyTrip.com.

Li believes it is not difficult for Chinese entrepreneurs to find "what can be pounced on and what must be experienced during India's leapfrog development."

Some market opportunities are obvious. "If Android smartphone users exist, they will use the desktop, clean, browser, search, app market, security, and other functions, and these are the opportunities for Chinese manufacturers," he said. The APUS user system provides such an all-in-one solution in the Indian market.

Li predicted that the number of India's mobile Internet users will surge, just as happened in China three to five years ago.

Li also said, "Four years before, the cost of building a research and development center in India was 40 percent of that in China. It is now 70 percent of that in Beijing. I think it is not cost-effective in the case of the 70 percent, because the cost of localization of management in India is higher than in China."

Faced with the onslaught of Chinese technology enterprises, indigenous innovators in India hold differing views. Some incubators told Yicai Global that excessive opening hinders the growth of innovative companies within the country.

However, Pranay Gupta, founder of incubator 91springboard, told Yicai Global with great envy that large Chinese companies will make the whole ecosystem more robust. Because these companies' initial public offerings will create more exit channels for venture capital investment, then an effective closed-loop will form between mergers and acquisitions, and investment mechanisms.