~ By Charmaine Mirza
World leaders may frantically close their borders, draw battle lines and build walls, but if there’s one thing that the 21st century has taught us, it’s that there are no naka-bandis when it comes to finance and technology.
This map shows Chinese investments in a variety of sectors across different regions of India, and the different stages of each investment.
TOP THREE SECTORS & REGIONS OF INVESTMENT:
The E-Commerce space in India has caught China’s eye – and it’s investment wallet. E-commerce is also a tried and tested game for many Chinese investors who have already sized up the pitfalls from China’s e-commerce landscape.
A large percentage of Chinese investment is in Indian e-commerce start-ups, with the big boys like Tencent and Alibaba at the forefront.
The National Capital Region, Greater Mumbai and Bangalore are the anchor hubs of Chinese financial investment and technology deployment. Ahmedabad, Hyderabad, Pune and Chennai are not far behind, rapidly rising up the ranks.
The numbers speak for themselves: NCR – 13; Bangalore – 11; Mumbai 4
FinTech start-ups is another area of growth in India. The Chinese already have their finger on the pulse and are well-versed in the various upsides and downsides of FinTech, from home-grown avatars in China.
NCR – 7; BANGALORE – 6; MUMBAI – 4
#3: MEDIA & ENTERTAINMENT
Indians are rarely at a loss for entertainment. With mobile networks upping their bandwidth, the demand for entertainment and media online is rising exponentially. The Chinese have already tapped into this niche and it’s the third largest sector for Chinese investment in India.
NCR – 6; BANGALORE – 6; MUMBAI – 5
WHAT AND WHERE ELSE?
Besides the big three sectors in the big three metros, the Chinese have made further inroads in India.
Beyond Mumbai, western India is certainly on their horizon.
One of the most significant Chinese investments in India was Fosun’s buyout of Gland Pharma in Pune, a city which also has Chinese investments in the automotive and logistics sector.
Ahmedabad has also emerged as a significant hub of Chinese investment in a variety of industries ranging from consumer goods to media, electronics to automobiles. Over Rs. 17000 crore has already been invested in Gujarat by the Chinese. Great Wall Motors and SAIC, have plans to manufacture both conventional as well as electric vehicles in Gujarat.
Chennai has 5 Chinese investments and Hyderabad has 4, in a variety of sectors. Electronics, automobiles, capital goods and aggregators seem to have drawn China’s attention in these cities.
TIER II CITIES:
Investments in electronics, a sector in which the Chinese are well versed, are scattered in various cities across the country. Tier II cities like Kanpur, Jaipur, Bharuch and Vijaywada have also received investments from the Chinese in a variety of sectors ranging from education to e-commerce, power and electronics.
It is a little surprising to see that Calcutta only has one investment from China, which is in Capital Goods – given it’s close proximity to the border with China and being an important centre for the tea trade.
WHAT’S THE LOGIC?
According to Nazia Vasi, founder of Inchin Closer: “Over the past few years, Chinese investments in India have scaled faster than a ninja on the Great Wall. Tencent, Alibaba and Didi have all made significant investments in India. The investments have been made in industries that are akin to their own businesses in China.”
The Chinese made some well-informed decisions. They started to study the Indian landscape over 8 years ago. They laid low, and did their research. Once they got their heads wrapped around the Indian market they started to make significant capital investments in India’s start-up ecosystem.
The Chinese were quick to catch on that Indian start-ups are often strapped for Indian funds. Therefore they need to look beyond India’s borders for funding. That’s where China steps in.
Indian consumer behaviour is very similar to Chinese consumer behaviour of about 5 years ago. Having learned from their own experiences in China, they could predict fairly accurately the direction in which the Indian consumers would go.
For example, when Alibaba invested in PayTM in 2018, the leadership already had a detailed understanding of consumer behaviour from it’s launch of AliPay in China. Therefore when it made it’s investment in PayTM it knew what it was getting into, and could drive PayTM’s growth in a way that worked for them.
By investing in India, the Chinese are consolidating a base of consumers which is only set to grow exponentially in the next 20 years or so. From e-commerce to FinTech, logistics to telecom, the Indian market offers a golden opportunity to the Chinese investor. They’re gambling on the fact that with the right impetus, today’s start-up could be the next TATA, Birla or Reliance for generations to come.
The combination of financial and knowledge capital is a powerful one. New investments could also be a double-advantage for Chinese companies that use their own technology prowess in areas such as electric vehicles, which are poised for growth in India. AI, Virtual Reality, and Robotics are all technologies of the future – and China has already positioned itself for maximum advantage in this arena.