American companies looking to break into India’s burgeoning digital marketplace are time and time again running up against stiff competition from local startups and their major financial backer, China.
U.S. companies like Amazon, Facebook and Uber have collectively invested multiple billions of dollars to increase their reach into India to grab increasingly valuable market share in their respective industries. Amazon alone has put up more than $5 billion to boost its eCommerce presence in India and is currently vying to put in some $500 million more to own online grocery sales.
Meanwhile, Chinese competitors like Alibaba, Tencent and rideshare operator Didi Chuxing have been placing their bets (and bucks) on local companies.
Combined, Chinese tech firms invested $3.2 billion in Indian startups, said The Wall Street Journal, over double the $1.4 billion invested in Indian startups by U.S. companies in the same period, according to data from Hong Kong’s AVCJ Research.
Earlier this month, for instance, Alibaba invested $177 million in India’s mobile payments startup Paytm’s new eCommerce arm. Likewise, Didi Chuxing, which bought Uber out of China last year, has had a stake in Indian rideshare startup Ola’s parent company since 2015. And Tencent led a $175 million fundraising round into local WhatsApp competitor Hike App last summer.
Tencent executives are helping to roll out many new services to become a one-stop platform for not just sending messages, but also for consuming news and more, Hike Founder Kavin Bharti Mittal told WSJ, adding that Tencent has “built what we’re trying to build. India’s economy and population have many more similarities to China than the U.S.”
What this all adds up to is that U.S. companies are facing stiffer competition than anticipated, as they fight for space in India’s crowded but increasingly valuable digital market. With China’s financial backing and aid funneling into India’s local startups, don’t expect any clear victors to emerge anytime soon.
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