PremiumBengaluru: Around 50 Chinese entrepreneurs have launched internet companies in India in the past one year, inspired by success stories of NewsDog, Shein and TikTok, according to multiple people aware of the matter.
While some of them such as e-commerce platform Mayfair and video-based e-commerce platform BulBul have recently attracted investments, there are several others that are being worked on by Chinese entrepreneurs in India. The reason: they are keen to ride the Indian consumer internet wave as China’s consumer internet market plateaus.
“Many entrepreneurs from China as well as folks who have worked in large Chinese startups have seen and built scale across multiple areas in China over the past 10 years," said Karan Mohla, a partner at Chiratae Ventures. “Now they want to build products for the Indian audience—and they believe they already have the China playbook for reference, along with India’s fast growing market."
Most of them are targeting the regional content space, with names such as Welike, 4Fun and Injoy, while close to 20 others are looking at the fintech space—including payments and lending—working under the radar, said three people familiar with the matter.
To be sure, some of these founders are not only looking at localizing their products, but also adopting Indian names to blend in with the locals. In fact, some of them do not even want to be referred to as a firm owned by a Chinese.
“Quite a few of them understand and appreciate Indian culture. They also understand the type of setup that needs to be built in India to encourage local innovation and decision-making," said an Indian investor, who has interacted with several of these founders. “To enable this, they have created inclusive cultures within their startups and even adopted Indian names in some cases to completely localize their approach," the investor added, requesting anonymity.
For a Chinese entrepreneur, who recently launched an internet company in India, the biggest challenge has been understanding the market, users and regulations. For this, he travelled to India several times before deciding to start up. Having friends at companies such as Vivo and Oppo further helped understand the market better, he said on condition of anonymity.
“It needs a lot of preparation to start a business in India—one needs to understand the regulation as well as the users," said the Chinese entrepreneur cited earlier, who is among at least 50 other Chinese entrepreneurs who have recently started up in India. “I travelled several times to Gurugram and Bengaluru—stayed for a week at least—talking to everyone and understanding the market before starting the business."
Despite the challenges, he believes the robust logistics and payments infrastructure in India, coupled with its next 200 million internet users, makes it the perfect market to foray into as China’s consumer internet market is maturing.
While some are hiring an Indian who can head and understand the local market better, some others have founded companies with an Indian co-founder for the same reason, said multiple people Mint spoke with.
For instance, the Chinese entrepreneur cited earlier has currently built a team of 10 Indians. “We are also looking for an Indian partner who can take on the role of a leader, who understands the users and the brand," he said.
Several of these entrepreneurs from China believe that India’s consumer story is where China’s was about 7-8 years ago, thereby giving them an advantage to build and execute better. India’s internet users are expected to register double-digit growth to reach 627 million this year, according to a recent report by research agency Kantar IMRB. In contrast, China already had over 800 million internet users during late 2018.
“They (Chinese entrepreneurs) also recognize that the consumer behaviour and preferences of the first 100-150 million digital users in India and China are quite similar," another Indian investor, who interacts with the Chinese ecosystem, said on condition of anonymity. “Hence they know the playbook and can comprehend what needs to get executed on the ground to cater to that large opportunity."
This mirrors the investor trends as well. While earlier, larger Chinese funds such as Alibaba and Tencent made big bets in India, they have been recently followed by the likes of ShunWei, CDH and Morningside. However, now the ecosystem is witnessing an increased interest from relatively smaller Chinese funds that are keen to make investments in India. According to three people familiar with the matter, 8-10 Chinese funds with a total corpus of $100-200 million have started to enquire about Indian startups for potential investments.
However, while the Chinese interest in Indian start-ups and audience is a positive sign, it remains to be seen if these companies will be able to make a mark in the Indian startup ecosystem, as it is replete with challenges despite several cultural similarities. There have been news reports of several Chinese companies retreating from India as well. A case in point is Beijing-based bicycle sharing company Ofo Bikes, while the most recent ones include the likes of Wecash.
Another major difference between the Chinese and Indian markets is that the latter is a much more heterogeneous one. Moreover, some Indian investors Mint spoke with believe that these entrepreneurs cannot be taken seriously until a proper product is built and gathers traction. “There are several Chinese folks who have started tinkering and building products in India; that doesn’t mean they are also starting up," an Indian venture capitalist said on condition of anonymity.
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