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[Op-ed] In India, Chinese tech companies see the next big growth market

2017-04-19 TechNode

Editor’s note: This was contributed by Tao Li, Founder & CEO at APUS Group. APUS creates apps designed to optimize and improve the Android experience and has over 1 billion downloads to date. APUS is the second youngest unicorn, valued at US$1 billion in less than seven months of its founding.

This year is set to be a pivotal year in India’s technology scene. I believe this is a year where more overseas investment than ever before will flow into its start-ups and early stage businesses. Although in recent years many of the biggest investments have come from US firms synonymous with Silicon Valley, 2017 will be the year when more Chinese companies are at the heart of the most interesting investment stories. These will be the businesses that use knowledge gained from China’s mobile internet boom to uncover the stars of tomorrow.

Much was written in 2016 about the investments made in Indian start-ups by Chinese companies. Many media commentators mistakenly linked the growth in outward investment by Chinese tech companies to the health of the Chinese economy. While economics will always play a part in business; the real reason is that Chinese companies see India as a major opportunity. It is at the same point that China was at perhaps five or six years ago, with the same tantalizing, untapped potential for technology and the mobile internet to revolutionize the lives of billions.

Today, India is home to more than 12,000 start-ups – some of which may become the next tech Unicorns, with products or ideas that will change our lives. With its fast developing economy, educated and English-speaking workforce and well-established IT sector, India has many things that make it attractive to overseas investors. It also has set up business and cultural connections with Europe and the US – an area where India is arguably more advanced than China.

In the last six months, more than $2 billion was invested in Indian companies – a sixfold increase over the previous year. That’s almost double the total invested over the past fifteen years. These investments are from Chinese companies that have already made the leap from being domestic successes to global companies. Tencent, Alibaba, Xiaomi and are some of the best known and most active investors in India to date. The Indian government has also been a proactive supporter of this inbound investment, through initiatives like Make in India, the Smart City program and Digital India. There is also an ongoing collaboration between the governments of the two nations.

At APUS, we have already announced partnerships with mobile advertising technology company InMobi, and the streaming video platform Hotstar. We are also exploring the collaborations with several of India’s biggest smartphone manufacturers, including Micromax, Reliance JIO, Intex, Lava, and Zen. These kinds of discussions are happening between Chinese and Indian companies right across the board, looking at where collaboration can outpace organic growth, and where the right investments today can drive change tomorrow.

Although APUS may not have the same resources as a company such as Alibaba or Tencent, we still plan to invest 10 billion Rupees ($152 million) in India over the next five years. Today, APUS has 50 million users across India, making it our biggest market. We believe that India’s growth will outstrip elsewhere, reaching 150 million users by the end of 2017.

Considering that India currently has over 371 million smartphone users in total, this may seem an overly confident prediction. But this is precisely the kind of growth we experienced in China as users switched from feature phones to smartphones – leaping from fewer than 50 million smartphone users in 2011 to more than 160 million by the end of 2012. Today, 980 million people are connected to the internet via their phones.

This wave of new smartphone users represents a significant opportunity for social and economic change – perhaps the greatest since the first emergence of the internet – as it offers access to services that currently are unaffordable and out of reach of much of the population. Education, commerce, banking – these are industries which are being transformed around the world as they shift from the desktop to the mobile device. What India also shares with China – and other markets where this will also happen in the coming years – is the leapfrogging of fixed-line infrastructure, straight to 3G and 4G networks. Millions of people who don’t have access to schooling, banking or government services become empowered through access to the mobile internet.

As well as improved infrastructure, schemes such as Digital India will depend on the energy and ideas of India’s start-ups and local companies to create the content and services that drive the mobile internet. This is where we are targeting our investments, to help businesses who are already innovating to grow and take advantage of the next opportunity. And of course, we want those companies to add their services to APUS, creating a whole ecosystem of local services that are available through the APUS user system as well as other local channels. The best of these services will shape the experience of the millions of new mobile internet users.

In the past decade, mobile technology has played a huge role in the transformation of Chinese society. China is now one of the most advanced smartphone markets thanks to the many innovative services which are mobile-first. These are the same services shaping so much of the wider technological and social changes happening in China today. There’s no reason why Indians cannot experience the same uplift and transformation from its mobile revolution. It’s this unique similarity with something that many Chinese entrepreneurs have already lived through, and it is this opportunity that is bringing Chinese and Indian companies together.