India has emerged as the next hot spot for Chinese smartphone makers while demand from domestic market wanes. Xiaomi, Huawei, ZTE, Vivo, OPPO, nearly all leading phone manufacturers raced to the country in the hope of duplicating their success in the emerging market.
Not only in smartphone industry, the mindset prevails in China’s tech circle as Chinese internet giants seeking to sustain long-term development amid a slowing domestic market.
Given the circumstances, “China vs. India” discussion is heating up. Chinese internet company Cheetah Mobile released a report this week in an attempt to dig possible answers for questions like what is the state of China and India’s internet development and which country will be the global leader in the future?
China’s Internet Development Leads India Overall
Despite a slowing growth, China still takes leads in terms of market size and the number of world-class internet companies when compared to India. China has the world’s largest internet market with 721 million users, while India has 333 million, according to the State of Broadband 2016 report.
In terms of mobile internet users, according to online statistics portal Statista, China’s mobile internet penetration rate is 44.91 per cent as of 2016. If you estimate China’s population at 1.4 billion people, that means China has 629 million mobile internet users.
India on the other hand has a mobile internet penetration rate of 24.33 per cent, or 316 million people (total population 1.3 billion). When you compare the two countries, India possesses roughly half the mobile internet users as China.
Statista’s data shows that as of May 2016 China had seven of the top 19 internet companies in the world by market value, compared to 11 in the U.S, one in Japan and zero in India.
According to Cheetah Mobile’s big data platform Libra, at the end of 2015, China possessed eight of the top 14 mobile internet companies in terms of active users, as compared to four in the U.S., one in South Korea and one in Russia.
India’s burgeoning internet companies possess a golden opportunity for overseas expansion due to the status of English as India’s de facto national language and the huge Indian diaspora, the report pointed out.
But despite these natural advantages only a handful of Indian companies have achieved overseas success, including online and mobile restaurant directory Zomato and mobile advertising company InMobi. At the current stage, India’s internet companies are mostly still in the local development stage.
Will China Maintain Its Lead or Will India Catch Up?
In terms of growth potential, India’s internet user numbers could still catch up. According to the G20 National Internet Development Report, India’s internet user base grew by 51.9 per cent in 2015, the fastest growth rate of all member states.
Conversely, growth in China’s internet user base has slowed significantly as China reaches the tail end of its so-called demographic dividend.
American venture capitalist Mary Meeker wrote in her 2015 Internet Trends Report that India is going to be the next tech leader and is expected to witness the emergence of a group of world-class internet giants. Cheetah’s report echoed the opinion and the reasons are similar to China’s mobile rise.
India’s internet development has skipped over the PC development stage and jumped right into the mobile internet era. Because of this, many enterprises don’t have baggage from the PC era, especially in the mobile space. Instead, it’s easier for them to compete in the mobile space with lots of space to grow.
The governments of both countries are working very hard to encourage innovation and entrepreneurship by providing strong support in the form of capital, tax relief, and among others.
China unveiled “Internet+” action plan while India rolled out multiple new policies to encourage the development of the internet as well as startups, including “Digital India,” “Startup India,” “Skill India” and the “India Innovation Fund.”
However, India holds an open attitude towards foreign internet companies. There are very few licensing requirements, even in sensitive industries like telecommunications. Moreover, the country has a richer talent pool to draw upon thanks to more advanced academic education system.
According to a report by global management consulting firm McKinsey, every year India has 1.5 times as many college graduates as China.
Competition vs. Cooperation
Even though in some ways the Chinese and Indian internet markets are technically in competition with each other, their relationship is actually mutually beneficial.
China’s internet company is moving closer to India market and their operations in India mainly take three forms, the report concluded,
- Direct operations, such as Cheetah Mobile, Lenovo’s SHARit, and Xiaomi.
- Invest in local market leaders and thus enter the Indian market through capital investment like Alibaba, Ctrip, Tencent, Fosun and Didi.
- Incubate and invest in early-to-mid stage startups, using the “Chinese experience + India Innovation” model to help these startups with capital, technologies and other resources.
As the Chinese market becomes more saturated, India is the first market that many Chinese companies target overseas. At the same time, India’s internet market development benefits from Chinese investment and expertise.
The article China Still Rules, But Will India Emulate as A Top Tech Frontier? first appeared on Technode.
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