“Everybody is betting on the future of India: Will there be the next Alibaba and Tencent.”

Editor’s note: This article is from WeChat public account “Deep Ring” (ID: deep-echo), author Ding Zhiren.

In 2019, the domestic market ushered in an important turning point: the total number of mobile Internet users peaked, the growth dividend officially ended, and the domestic mobile Internet market was transferred to the stock competition stage.

A new stage of development, sailing to the sea has become an important choice for Internet entrepreneurs.

Based on past experience, we have already learned about the diversity and complexity of overseas markets. During the National Day, the team has selected a large number of materials and market front-line cases to introduce Africa, Southeast Asia, Latin America, India, The core trends of the major destinations in the Middle East and the United States help readers explore the competitive differences in different markets and the nature of user needs, and identify opportunities.

Core points

▪ In recent years, the rising economic level and Internet penetration have made India the largest single Internet market outside of China and the United States.

▪ India has surpassed the United States to become the country with the most mobile data usage in the world.

▪ China Capital has a unique advantage in the development of China’s Internet history and has an advantage in India.

The US Internet company products are still the dominant channel in India, and Chinese Internet companies need more time to go to India.


When you mention India, what do you think of?

Songs and dances, curries, overloaded trains and mysterious temples?
  Or OYO, generics and IT outsourcing?

The above two types of things seem to be completely out of one dimension, but together they have shaped a complex Indian market.

The population of more than 1.3 billion and still growing rapidly determines IndiaThe potential is huge, and the rising economic level and Internet penetration rate in recent years have made India the largest single Internet market outside of China and the United States. At the same time, the social inequality caused by the complex language environment, gender and caste system, and the excessive urban-rural development gap have also created many obstacles for this emerging market.

After 2014, India briefly set off a wave of venture capital, but since many investment decisions were relatively blind, the entry of funds did not promote the production and growth of unicorns. continued. After a few years of silence, the entrepreneurial and investment boom around the Indian market has revived, and the Chinese forces who have joined in it have chosen a more cautious attitude.

At the same time of the resurgence, the Indian elite has gradually awakened, which has spawned more and more local unicorns. Among them, after winning the Indian market, OYO will focus on the Chinese market. And triggered a boom in the transformation of individual hotels in the Chinese market.

In the context of the gradual loss of the domestic mobile Internet growth dividend, the gold rush into the sea has become a new choice for venture capitalists. In the face of a market with huge future space and complicated conditions in India, how should China’s venture capitalists cut through to succeed?

Rising South Asian powers

India is not to be underestimated. This view has been getting more and more in the past few years. Many people understand and recognize.

In 2018, India’s GDP growth rate ranked first in the world, with the sixth largest in the world.
  After more than 30 years of development, India is rapidly emerging as an important economy in the world.

With China as a reference, you can see what level of development India is currently in:

  • Economic growth: In 2018, India’s GDP growth rate reached 7.4%, and China’s 6.6%.
  • Economic total: The total GDP released by the National Bureau of Statistics is US$13.6 trillion
      (about RMB 90.0309 trillion)
      According to data from India, the country’s nominal GDP reached 185,768.50 million rupees.
      (about 2.716 trillion US dollars)
      It is about 20% of China’s total GDP.
  • Per capita GDP: The per capita GDP announced by the National Bureau of Statistics of China is 64,644 yuan.
      (about 9768.8 US dollars)
      India’s per capita only$2030, slightly higher than 1/5 of China’s per capita.

    Overall, India’s economy is growing at a significant rate, and there is still a large gap between the total and per capita GDP.
     

    Investment workshop senior investment manager Qi Fei concluded: “Since India’s market economic policy reform in 1991, it has grown from GDP of 300 US dollars to 2030 US dollars in 2018, which is equivalent to the past 27 years. In time, India has grown steadily at an average annual growth rate of 7.34%. We cannot ignore the fact that India itself is and has been developing at a high speed because of China’s unique economic miracle in the world.”

    While the economy is growing rapidly, the Indian Internet industry is also developing steadily.

    In 2016, the number of Internet users in India was 355 million, the network penetration rate was 27%, and the number of Internet users ranked second in the world, second only to China.
      After nearly two years of development, by September 2018, the number of Internet users in India has increased to 560 million.

    At present, India’s population pyramid presents a classic upper narrow and wide shape, which indicates that today’s India is a typical labor-intensive country. From the specific structure, the population under 54 years old accounts for 85 %, 65% of people under 35 years old, and the proportion of people aged 0-24 is far more than China.

    According to World Bank forecasts, India’s demographic dividend will continue until the outbreak occurs in 2025.
      It is estimated that by 2025, the number of Internet mainstream users between the ages of 14 and 48 will reach 800 million.
      It can be seen that the Indian demographic dividend will not be small compared with China in the next few years, and the dividend period will continue for a longer period of time.

    In the construction of basic communications, due to the emergence of JIS, which entered the telecom market in the free mode in 2016, the communication construction in India has made great strides.
      Since January 2017, India has surpassed the United States and become the country with the most mobile data usage in the world. The monthly mobile data used is almost twice that of China. Before its change, its average network speed was at a medium-to-middle level globally. The situation.

    At the policy level, the Indian government vigorously promoted entrepreneurship. In 2016, the Modi government put forward the slogan “India entrepreneurship, India’s rise”, starting from policy reduction and financial support, actively promoting Indian Internet entrepreneurship, with a view to establishing The ecosystem of entrepreneurial innovation.
      In addition, the federal government’s efforts in promoting infrastructure construction, state-level cashless payment systems, and unified identity systems have helped open up the IndianThe relatively scattered market situation has formed an active and unified large market, thus promoting the flow of resources and the release of consumption potential.

    In the face of huge opportunities, various venture capitalists gathered together to share the market dividend:
      The international VC represented by Tiger, Sequoia, DST, and the speed of light, the Chinese giant represented by Tencent Ali, the Indian VC represented by Kalaari capital, and the Chinese startup represented by UC and Yeahmobi constitute India Innovative The territory of the market.

    Investing in the joint venture of Yeahmobi, Dingkai, Onion Mobile and other products in India
      (CoBuilder Partners) Founding partner Cheng Huajie commented:     “The gambling is the future of this country, whether there will be the next Alibaba, Jingdong, Alipay, Tencent, Vipshop. “

    Where is the opportunity?

    The story of Chinese mobile phone manufacturers in the Indian market is already well known, and the opportunities for smart phone penetration and the rapid development of the mobile Internet industry can be brought about. Still need to be carefully examined.

    The development of the Indian Internet industry today is inseparable from the local telecom operator Reliance Jio. This half-road black horse has brought India from the 3G era into the 4G era.

    Reliance Jio was built by India’s richest man, Mukesh Ambani, who has done the following in promoting Internet construction in India.

    • Building a 4G network covering all of India from scratch in 2016, investing billions of dollars to build nearly 100,000 base stations in various places. Currently, its 4G network covers nearly 20,000 towns and more than 200,000 in the country. The village accounts for 90% of the national population.
    • Improve a very low-cost 4G phone for just INR 1500
        (about RMB 150)
        Deposit
        (All refunds after three years of use)
        And can also use the three-month 4G package service for free.
    • Jio provides apps that cover music, videos, games, chat, payment tools, and more, for users to download and use for free, while limiting these apps.Register with Jio under the Jio network.

      After three months of free use, India’s 4G users consume an average of more than 1400M per month, of which Jio users account for a large portion. Jio announced that it will continue to provide three months of free services to further attract new Users, consolidate old users.
        Jio’s free period ends at the end of March 2017, and the Indian Internet community is rapidly upgrading with this seemingly crazy and self-willed boost.

      At present, the traffic of Jio1G only needs RMB 5 yuan after the charge, which is equivalent to 1/5 of the current mainstream price of the Indian telecom market, which greatly promotes the penetration rate of Internet and smartphones in India. The ceiling was raised by Jio.

      In the face of opportunities, Chinese capital is highly active in India.

      Indian senior investor Mohanjit Jolly said in a speech: “From 2016 onwards, international capital investment has cooled down and Chinese capital has begun to enter.China People are really optimistic about the development prospects of India. They really want to grow together with the Indian market. There is no doubt that they will change the Indian market in the next few years.”

      This situation is related to the current state of investment in India.

      On the one hand, Chinese venture capital trading is more active than India. In 2015, the number of investment and financing transactions in the Internet industry in China was as many as 4,000, and the number of transactions in the Indian market was about 1,000. According to data from the Zero2IPO, the amount of funds raised by Chinese and foreign venture capital institutions for investing in mainland China in 2016 was 526. One hundred million U.S. dollars
        (More than 80% of the RMB currency), more than half of which is used for investment in TMT and Internet industry.

      On the other hand, India’s investment market is still small.
        According to data from Venture Intelligence, in 2016, VC/PE investment in the Indian market raised only $4.9 billion.
        The gap is more than 10 times. This data does not include all kinds of government funds in China.

      So overall, in the eyes of Yu Fei, India’s Internet investment is not highly intense and has interconnection with China.