In their global war to take on American internet giants such as Amazon and Uber, Chinese e-commerce players are placing their bets on Indian online players. Companies such as Alibaba and Didi Kuaidi are ring-fencing themselves from their US rivals through big-ticket investments amounting to about $3 billion this year.

The bets have been placed strategically in segments where the US-based players are strong. For example, Alibaba has picked stake in online retail firm Snapdeal at a time when US major Amazon is aggressively expanding its presence in the Indian e-commerce space.

Similarly, Didi Kuaidi recently made a strategic investment in cab-hailing service provider Ola, a direct competitor to the San Francisco-headquartered Uber.

Digital space

“US companies and investors are not yet investing on a large scale in the digital space in India and China wants to beat them at it,” says Ashish Jhalani, e-commerce expert and founder of consultancy firm e-Tailing India.

While China’s search engine Baidu is now looking at entering India, another major online player Tencent has invested in healthcare start-up Practo. China’s messaging app WeChat is also ramping up its expansion to compete with Facebook-owned WhatsApp.

“Successful Chinese companies that have healthy balance sheets see India as the next big opportunity. With 400 million internet users and 30 million online shoppers India has the scale which will excite any investor. Geographically, it works out better for Chinese company to expand in India instead of the US.

“We will see more Chinese companies coming out and investing in India in the near future,” said Tej Kapoor, India Head (Investments) for UK-based Daily Mail Group.

Other reason

The other major reason for heightened interest in the Indian online space is the fast growth in smartphones. While the growth in China has dipped over the last year, India is at the cusp of a broadband revolution.

Harish HV, Partner at Grant Thornton, said: “The Chinese market has started to slow down and hence companies are looking at India, which is similar to China in terms of demography, population and rising middle class. India is where China was three years ago and they know which model will work and how. The collaboration with Indian companies also gives them the bandwidth to kill their common American rivals.”

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