Chinese companies have been gaining market share in India on a large scale, but in a different way than other foreign companies. William Bao Bean, managing director of the Chinacellerator, looks at their strategies and how they gained market share, for US News. William Bao Bean has a solid business background in both China and India.
Why are Chinese tech startups looking at the Indian market?
For China, the market develops using a leapfrog methodology. Because (China didn’t have) 150 years in retail infrastructure and history, the consumers in China were much more open to embracing e-commerce. So e-commerce penetration in terms of (the) number of transactions is much higher in China versus the U.S. or Western Europe. The challenges and problems that consumers have in Southeast Asia and South Asia are quite similar to the ones you’ve seen in China over the last decade or so, so the solutions that the Chinese entrepreneurs have developed are more suited to solving the problems in these markets versus the one-size-fits-all (strategies) that you get from, say, Facebook or Google.
How is China’s strategy better than America’s when it comes to penetrating the Indian market?
U.S. companies have gone in direct with their platform that they sell to every country, whereas China failed to bring their own products into India, so what they’ve done is partner and invest in local players and bring in technology and know-how, especially around areas like artificial intelligence and machine learning. They’re not going in under their own brands or with their own products. This strategy is a lot more effective, so it’s China-plus-local versus North America.
Is China also helping India develop through its investments in any way?
No. When they invest, they do inject quite a lot of back-end technology, but to the outside world they are local companies. Previous to this, Chinese internet companies had a strategy of trying to enter the market themselves, but they failed. (Now) they invest in local entrepreneurs, the leading players in commerce and payment and other strategic sectors within the internet ecosystem. So it’s an Indian face with Chinese technology and capital.
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