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BATx bet on Indian startups despite political differences between India and China


The ebb and flow of border conflict between India and China might be continuing for long, but the trade relationship between the two countries have been witnessing a completely different pattern on the graph.

The trade between India and China has been largely positive — or rather increasing at an unprecedented rate.

China has recently appeared as one of the fastest-growing sources of foreign direct investment (FDI) for India. Last year, it invested a record $1 billion in India.

Of many investments happening across automobile industry, metallurgical industries, electrical equipments and industrial machinery, Indian startups have also got some chunk of Chinese investments made by the tech giants such as Baidu, Alibaba, Tencent and Xiaomi or BATx .

The industry experts believe that in the startup ecosystem, the two countries share many similarities such as a huge population, mobile-first approach, similar consumer spending habits and income levels; which make India a favourable spending ground for these Chinese tech companies.

The four tech companies (BATx) have invested a total sum of around $2.5 billion in Indian startups.

B for Baidu

Last year, Beijing-based search engine major Baidu Inc. announced to set up a $3 billion fund to invest in the internet sector.

According to reports, the fund ‘Baidu Capital’ was aimed to focus on mid- and late-stage firms, with individual funding amounts ranging from $50 million to $100 million.

Baidu, one of the fierce players in the Chinese Internet space has been rather surprisingly slow when it comes to investments in the Indian market. Nevertheless, the company has several mobile apps on the market and claims that most Chinese apps in the Indian market are already partnered with Baidu.

The company is looking forward to expand the user base for its apps and providing a better ad platform for businesses than the existing ones.

Another area where Baidu will focus its attention is content. According to its India head Tim Yang, Baidu will continue its search for promising startup investments.

Tencent opens red packets in India

While Baidu has still been thinking to make some strategic investments in Indian startups, Tencent has opened an investment floodgate.

In the last two years, the Chinese Internet conglomerate has invested around 1 billion in Indian tech companies.

In April this year, Tencent led a $1.5 billion funding round in e-commerce platform Flipkart. Two months ago, it invested an undisclosed amount of investment into India’s leading edtech startup Byju’s.

Last year, Tencent invested $175 million in Hike messenger and now aims to replicate the WeChat — the messaging app which couldn’t take off in India — model through the messaging app Hike. The WeChat strategy was based on linking social media with commerce.  

 In June this year, Hike launched India’s first in-app mobile payment feature. Soon after, Indian users got their first taste of the red packet mania, this time with blue envelopes. The transplant seems to be successful since money gifts play a big role during local festivals.

Other Tencent’s investments include in healthcare firm Practo and travel site ibibo (which recently merged with Ctrip-backed MakeMyTrip). Besides, cab aggregator Ola is also set to receive $400 million investment from the Chinese Internet company.

Alibaba builds Indian mobile payment

The Chinese e-commerce firm made a debut in India with an investment of $500 million in Snapdeal in 2015.

A few months later, Alibaba invested around $680 million in Paytm, in which it now owns a majority stake (60%) and has been trying to write a success story through it, replicating Alipay’s model in India. The e-commerce group has invested a total amount of around $2 billion in Paytm till now, making it second-most valued startup with a total valuation of $7 billion.

Paytm has also spun off its own e-commerce platform, Paytm Mall, much like Alibaba’s Tmall in China. This, along with a $500 million round of financing in online shopping platform Snapdeal, has raised Alibaba’s stakes in India’s rising online retail sector which is estimated to reach $55-60 billion by 2020.

Besides, UCWeb, part of the Alibaba Mobile Business Group, has been a strong player in India. Alibaba has also entered India’s cloud computing industry which is projected to grow to $1.81 billion in 2017. Other investments include a majority stake in ticketing platform TicketNew through Alibaba Pictures.

Xiaomi, #1 player in smartphones

The smartphone maker which has already achieved the $1 billion revenue mark in 2016 focuses on higher revenue, performance, offline expansion, adding capacity to local manufacturing and investing in new start-ups while expanding the Mi ecosystem with new products.

During 2015 and 2016, Xiaomi had invested around $500 million in building manufacturing facilities in India with the help of contract manufacturer Foxconn. The company aims to invest the same amount during the next three to five years.

This year, the company also plans to increase its service centres from 200 to 500.

On investment front, Xiaomi also made its first investment in India, leading a $25-million funding round into Hungama Digital Media Entertainment, an online entertainment content aggregator and publisher.

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