Apr 03, 2018 05:08 PM

Opinion: Chinese Investors Shouldn’t Neglect Indian Corporate Technology Firms

A leading Indian business daily reported on March 6 that Chinese corporations had made investments of $5.2 billion in Indian early- and growth-stage companies in 2017, and the figure for the first two months of 2018 had already crossed $1 billion.

There are a number of reasons why the Indian technology entrepreneurial ecosystem presents attractive opportunities to Chinese strategic and financial investors. First, the Indian economy has grown at an average rate of 7.1% over a 20-year period from 1997-2017. The major reforms undertaken in 2016 and 2017, such as demonetization, the Goods and Services Tax, the introduction of the Insolvency and Bankruptcy Code, and the recapitalization of the banks could further accelerate growth. Second, India is the only country that can offer Chinese investors a market similar in size to their domestic market. Although Indian consumers’ spending power is yet to reach the level of their Chinese counterparts, the continued growth of the economy will narrow the gap over time. Third, in the Indian technology ecosystem, while certain verticals such as search and social media already have strongly entrenched U.S. competitors (Google and Facebook respectively), there are others such as ecommerce, the sharing economy and online gaming where Chinese companies can still build strong market positions.

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