Emerging investment trends between India and China
March 8, 2016

Emerging Investment Trends between India and ChinaTwo complementary, interesting trends are emerging from the warmer understanding between China and India and both nations fierce desire to constantly grow.

Firstly, Chinese investors are eagerly watching the Indian market, coming to investigate investments and often pouring millions into Indian start ups as the Indian economy starts to trot at a slightly faster clip than the Chinese economy.

The second interesting, emerging trend is that with the Chinese economy far ahead that of India, many entrepreneurs, venture capitalists and private equity players are visiting small to mid sized firms and start up conferences to understand and predict where the Indian market will be five to ten years from now.

The mix of these two trends, is seeing a higher and more sophisticated level of transactions between the sweet and sour neighbours. While all of this is government agnostic, it is building stronger relationships between the two nations and filling a need gap in both economies. The Chinese have a new, energetic market to invest in and Indian start ups have an orb to see the future.

“The consensus in China seems to be that India will be the next growth engine for the entire global internet market, because of its population, economic growth and rising internet penetration,” Alex Yao, senior vice-president at Cheetah Mobile told the Financial Times. The Beijing-based group, which makes utility software for Android smartphones was the lead investor in Indian entrepreneur Vishal Gondol’s wearable fitness device maker GOQii. The Chinese firm invested Rs. 880 million (US$12 million).

A slowing Chinese economy and an Indian market hungry for fresh funds have seen Chinese investments in everything from real estate to technology start ups. While several little known companies such as Cheetah Mobile are looking at making investments in atleast 20 start ups to the tune of Rs. 500 million plus, larger Chinese groups such as Baidu, Tencent and Jack Ma’s Alibaba are also looking at buying in. The focus remains on infrastructure and technology sector investments – areas that the Chinese know are growing and have substantial experience in. The next few months are expected to see many more strategic investments by the Chinese in Indian companies.

On the other side, having experienced a huge boom in the Chinese market and having superseded several technology levels, the average Chinese consumer market is atleast five years ahead of India. Take for example mobile payments, a factor of ease in China five years ago where most urban payments were made through smart phones. In India, online payments had just taken off and most consumers were still apprehensive about online payments. Jump into 2016, when India, has hopped onto the same mobile payments wagon and is paying for everything from taxi rides to food from their smartphones.

It is for this reason that many Indian entrepreneurs, Venture Capitalists and Private Equity managers are visiting Chinese start up conferences, meeting mid sized companies and tapping into the Chinese start up space to understand where the Indian market will be five to ten years from now. For this insight will not only help them identify where the market is heading, but will also help in investing in the right companies before valuations skyrocket.

Inchin Closer on its part, has been approached by several Indian VC’s and PE’s to organise trips to China to understand this space. Similarly, being an India China consultancy, we have also been asked by several Chinese companies to help them find credible, high growth Indian companies they can invest in. We’re glad to be assisting on both sides of the spectrum. Having a good understanding and network in both nations, we believe Inchin Closer is well placed to coalesce Inchin investments.

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