Source｜potential field(ID: shichangcaijing )
Head picture｜ Stills of “Little Loli’s Monkey God Uncle”
A
On August 27th last week, reports showed that Alibaba Group has shelved plans to invest in Indian companies and will not invest in Indian startups for at least the next 6 months. People familiar with the matter also said that Alibaba currently has no plans to reduce its holdings or withdraw from the investment that has been completed.
If you often follow the Indian news, you can remember another message from July.
A local court in the Indian capital of New Delhi issued a document summoning Jack Ma, asking them to appear in court on July 29 or through a lawyer. According to sources, this incident may be related to India’s closure of the UC browser and the Alibaba Group’s immediate withdrawal of its 700 million investment in the Indian giant Zomato.
As a person who often follows Indian news, I can draw a very clear conclusion: Alibaba is not going to continue to explore the Indian market, because India itself is not suitable for the development of e-commerce economy, especially China’s e-commerce Quotient.
Due to the deep cultivation of developing China, Ali was able to quickly grow into the world’s e-commerce giant, but today, it is also sinking into another huge developing country.
Why can’t Ali “conquer” India? This article will bring some help to observers in India and investors who are concerned about India’s growth dividend.
B
Let us start straight to the point, and first answer a question: Why is India not suitable for developing e-commerce?
The answer is simple. The development of e-commerce requires a strong domestic logistics system. The items ordered were delivered only ten days and a half months, especially some fresh foods, which stinks at home. Are you still in the mood to continue shopping online?
To put it plainly, it depends on the construction of infrastructure such as railways and highways.
At this point, few countries in the world do better than China. Every year, we take the “Tie Gongji” as the representative of this kind of infrastructure construction, which is an investment of several trillions and trillions. In the 12 years from 2008 to 2019, China’s cumulative infrastructure investment exceeded US$10 trillion, accounting for about 10% of GDP.
Because of the rapid development of infrastructure, express companies such as SF Express, Zhongtong, YTO, etc. are rapidly emerging.
And here, India claims to haveThe world’s second largest road network, almost 5.9 million kilometers, is statistically higher than China.
However, rural roads in India account for the largest proportion, accounting for about 70%, while high-grade national roads account for less than 5%.
Many of these rural roads in India have no hardened pavement. In China, this kind of road should have been renovated long ago. If it is not renovated, it will be a gravel road or a dirt road. Even some states have all-weather roads. The implication is that there are still many roads in these states that are impassable under bad weather.
General road conditions on rural roads in India
The highways in India are also very interesting. Some Indian media claim that India has 70,000 kilometers of highways, which is almost half of China’s.
WTF? When has India been so awesome? Look for the reason carefully. It turns out that in India, Highway belongs to a national highway, called National Highway. The highway in our impression is actually called Expressway in India.
This Expressway is only 1,600 kilometers in India, even if it is under construction and planning, it is only 17,000 kilometers. In China, in 2000, Expressway had reached 16,000 kilometers.
India has a long way to go to build a dense highway network like China.
This is especially true of Indian Railways. The mileage of Indian railways opened to traffic is known as the largest in Asia, that is, last year, China surpassed India.
However, most of the railways in India are single-track railways. Many lines are in disrepair over the years and the system is extremely inefficient. The average passenger speed is 50 km/h and the freight speed is only 22 km/h. This makes the loss rate of logistics in India extremely high, between 15% and 18%, compared with 8% globally and 5.8% in China.With this speed and efficiency, do you want to develop efficient logistics?
We are familiar with the overview of Indian railways
The World Bank has an LPI (Logistics Performance Index) that specifically evaluates logistics, which lists the convenience of logistics in various countries.
Let’s take a look at China from 2007 to 2018. In addition to the logistics index remaining at 27th place, other indexes—
For example, the LPI ranking has advanced from 30th to 26th;
Infrastructure ranking moved from 30th to 20th;
The International Transport Index moved from 28th to 18th.
It can be said that the progress is considerable. In contrast–
India’s LPI index dropped from 39 in 2007 to 44 in 2018;
The logistics index dropped from 31 in 2007 to 42 in 2018;
Infrastructure dropped from 42 in 2007 to 52 in 2018;
International transportation dropped from 40 in 2007 to 44 in 2018.
Comparison of LPI Index between 2007 and 2018
These data alone can explain too much. The logistics infrastructure is becoming less and less up to date. How to develop the e-commerce industry?
C
Someone may ask next, if India’s logistics system is innovated, is it possible for e-commerce to take root in India?
Answer: Still difficult.
Next, let’s talk about the manufacturing industry in India.
Everyone has heard a saying that most of the sellers on Taobao come from Jiangsu, Zhejiang, Shanghai, Fujian, and Guangdong. This is because these sellers are closer to the production bases in the Yangtze River Delta and the Pearl River Delta, and the cost of goods is lower. The rapid development of China’s e-commerce is actually the result of the development of a strong manufacturing industry + efficient logistics system + network era.
JD Logistics has entered the era of automation
If a country has established a strong logistics system, but has not established a strong manufacturing system, then the country’s manufacturingThe industry will be defeated by Chinese manufacturing.
The first thing that exposed this problem was the burning of the Chinese shoe city in Spain in 2004.
There is a shoemaking center in Spain called Elche, located in Valencia. In the decades before the arrival of the Chinese shoe industry, it has always been one of the shoe manufacturing centers in Europe. After China joined the WTO in 2001, Chinese-made leather shoes began to flood into Spain, and Elche quickly became a transit point for Sino-European shoe trade.
Locally produced leather shoes cost about 30 Euros per pair, while similar leather shoes produced in China only cost 8-15 Euros. Note that this is the price after deducting various expenses such as customs, freight, and employment costs. If only the production cost is considered, it is about 3-5 euros for a pair, which is about ten times the difference.
The result of this huge difference in production costs is that the local shoe industry went bankrupt within a few years, and then the unemployed workers sprinkled their anger on the Chinese shoes, believing that they were made in China. work.
Screenshots of old news
In order to deal with the rapid influx of Chinese products, the most common method adopted by countries is anti-dumping litigation. From 1995 to 2012, China suffered a total of 916 anti-dumping lawsuits, accounting for 21.7% of the world’s total cumulative cases, much higher than other countries.
The most surprising thing is that the country with the most anti-dumping lawsuits against China is neither the United States nor the European Union, but India.
From the establishment of the WTO in 1995 to the end of June 2016, India initiated a total of 193 anti-dumping cases against China, compared with 140 in the United States and 128 in the EU.
D
If India has established an efficient logistics system and the manufacturing industry becomes stronger, then Indians can enjoy the convenient and fast e-commerce like China?
A: You still think of the magical India too simple. Even if logistics and manufacturing have gone up, India still has difficulty developing e-commerce.
Let’s take a look at China first. A popular saying is that it is getting harder and harder to do in physical stores. why? This is because e-commerce has reconstructed the domestic consumer network system and occupied more and more market shares.
In 2012, the total retail market in China was 21 trillion, of which online retail transactions were 1.3 trillion, accounting for 6%.
In 2019, the total retail market in China reached 41 trillion yuan, of which online retail transactions were 8.5 trillion yuan, accounting for 21%.
Will the physical store have a good day?
China’s retail market size
Not only China, but RumeiThe main political supporter of the Bharatiya Janata Party in the city.
In 2013, Wal-Mart had the idea to retreat, but it still couldn’t give up the big fat in the Indian market.
After years of hard work, in 2017, India revised the laws related to foreign investment control. Not long after, Wal-Mart bought Flipkart, India’s largest e-commerce company, for US$16 billion to re-enter the Indian market.
As a result, in dozens of cities, millions of people protested against Wal-Mart’s entry into India. It is said that the fuse is that Flipkart will frantically discount their merchandise during Diwali and will not give shopkeepers a way to survive.
Indian vendors who oppose Wal-Mart
And you know, e-commerce is more than offline retail giants