What we will say, Is this Narendra modi effect or what but China’s one of the largest search engine Baidu and one of the country’s biggest private conglomerates Fosun are scouting to invest in Indian startups, joining compatriots from the Middle Kingdom eager to profit from the opportunities in the world’s fastest-growing major economy. Investment managers from both companies are in talks with Indian venture capitalists and start-ups for potential funding deals, two people directly aware of the development told ET.
Taiwan’s Foxconn is also an investor in Snapdeal along with Japan’s SoftBank. “They (Baidu and Fosun) have been having conversations about specific opportunities — the startup names include niche e-commerce firms as well as some in the enterprise space,” said a second source.
“Unlike Alibaba, which primarily looked at e-commerce, Baidu and Fosun are not averse to looking beyond consumer Internet,” said one of the sources cited above. Consumer Internet group Alibaba, which floated the world’s largest IPO in 2014, bought stakes in Paytm and Snapdeal this year while Tencent, the creator of the WeChat messaging service, invested in healthcare portal Practo last month.
Baidu is China’s most popular search engine and the world’s fourth most popular site after Google, Facebook and Youtube. The company is listed on Nasdaq and has a market capitalization of $52 billion (Rs 3.4 lakh crore). Fosun group, which has an interest in steel, financial services, and real estate, is listed on the Hong Kong Stock Exchange and has a market value of nearly $13 billion. Representatives for Baidu and Fosun did not reply to email queries sent on Thursday.
Other than the potential for fast growth in India, observers said the Chinese companies are also responding to conditions turning unfavourable at home – economic growth has been slowing, and the Chinese stock market has plunged in recent weeks. On the other hand, although there are many gripes about the slow pace of economic reform, the World Bank and International Monetary Fund are bullish on the India growth story.
“India is the next big wave,” Lip-Bu Tan, chairman of venture capital firm Walden International said in an interview last month. “With large companies like Foxconn coming in and Flextronics with a presence here already, we can start to really scale. It is going to be huge.”
Alibaba, China’s biggest e-commerce company, too is feeling the effects of a slowing economy as consumers cut spending. Since going public last year, Alibaba has lost around $65 billion in value. While India is not completely insulated from economic risks, it appears more lucrative with a surge in the number of online shoppers as the internet user base tops 300 million.
Rutvik Doshi, director at Inventus Capital Partners, said India is at an “inflection point,” similar to what was witnessed in the United States in the mid-nineties and in China around the middle of the last decade. “China is seeing a slowdown, markets have crashed and their currency has been devalued. India provides a great opportunity to Chinese companies just like China gave to SoftBank and Yahoo,” Doshi said.