(Chinese Version)

Indian Prime Minister Modi’s visit to China in this May has erupted China’s science and technology corporations’ crave for India. While mobile phone makers are showing off the sales amount and market share, Foxconn is planning to invest 5 billion dollars in building factories in India, and B.A.T, seeking to compete internationally, have been aiming at Indian market.

Earlier this January, Wall Street Journal reported that Alibaba would invest around 0.575 billion dollars in Paytm, Taobao of Indian version. Later, India’s Economic Times released two articles confirming that Alibaba, Foxocnn and Softbank jointly invested 0.5 billion dollars in Snapdeal, India’s leading e-commerce. At the same time, news went around that with 0.7 billion dollars, Alibaba bought into Micromax, India’s second largest handset maker, which is also called by media as MIUI of Indian version.

Compared to Alibaba, Baidu had almost zero share in Indian market previously. As Baidu’s vice president, Li Mingyuan’ s presence in GMIC(Global Mobile Internet Conference) held in India, made people guess that Baidu would march into Indian market. However, since Baidu’s International Business Division founded in 2013, Baidu has already set branch offices and representative offices in Thailand, Brazil, Egypt and Indonesia. Marching into Indian market is expected.

Tencent was the first among the Big Three Chinese Internet and E-Commerce Companies marching into Indian market. WeChat officially appeared in India on May 14th, 2013. It invited Parineeti Chopra and Varun Dhawan, both are Bollywood stars, as its spokesperson. Wechat has won 27 percent of India’s market share attributed to the localized management. Its share in Indian market has long surpassed Line and Snapchat with the same background. However, Tencent’s other business did not follow up Wechat’s pathfinding.

Mobile phone makers’ exploration in Indian market has shed light for Internet giants who struggle in international markets. India’s population bonus and mobile phones’ upgrading wave provide favorable opportunities for mobile phone makers, while the rise of India’s local mobile phone brands has proved the huge market located in Indian mobile phone industry. However, will Internet companies, such as B.A.T. be suitable for the favorable Indian market? We will discuss about it on the following factors.

Will BAT repeat their failure in Japan again in India?

Japan and India are China’s two neighboring countries. Although their economic development are not in the same level, the two countries share similarities in many ways. First of all, they all have some hate towards China. This hate is shown in Japan on politics, however it is hidden in India’s civil society. Second, India and Japan are short of local Internet giants. Google, Facebook, Yahoo and Amazon hold absolute market shares. Third, both countries have not formed their own Internet culture. Thus, let’s first take a look at B.A.T.’s less satisfied performance in Japanese market.

Baidu launched its Japan projects in 2006. Two years later, Baidu’s Japan version formally went online. Baidu Search, input method and Baidu post bar landed in Japanese market afterwards. Baidu’s competition with Yahoo and Google as competitors in Japan announced failure in April, 2015.

Alibaba, with Softbank’s support, did not go well in Japanese market. Alibaba released Japanese B2B platform based on Alibaba International in 2002. Also, Alibaba and Softbank founded the joint venture, Alibaba joint-stock company, formally marching into Japanese market. At the end of 2013, Alibaba closed its Japan station with the excuse of adjustment in business and integration of resources. Its business in Japan had been integrated into Alibaba International. Later, Taobao marched fully into Japanese market with the name of cross-border online e-commerce. However, it was not a success, either.

Tencent was the last one among the Big Three Chinese Internet and E-Commerce Companies to eye on the Japanese market. However, it is the wisest one. In 2012, Tencent and Japanese carrier, KDDI, jointly launched Japanese version QQ mobile app, with Chinese people in Japan as its main service target. Tencent invested Aiming and 20577 afterwards as an indirect way of entering into Japan’s online-game market. However, Tencent is still of little importance in Japanese market.

Apart from competing with strong competitors, the connection of B.A.T.’s failure in Indian market with politics could not be ignored. Although we admit the way of entering into a foreign market directly decides the last result. Take Baidu as an example, Baidu input method played an important role in the early stage of market exploration. However, Japanese government’s ban on Baidu input method was the main cause of its failure in Japanese market.

Compared to Japan, Indian market is more complicated. It has more cultural differences and less political stability. However, Indian government’s reform and opening-up policy and the huge population bonus waiting to be explored have given B.A.T. the determination to bite into Indian market. Alibaba chose investment as an indirect way to enter into Indian market, while Baidu and Tencent did not have clear strategies. Thankfully, the three companies could find a reasonable way to succeed this time, not to repeat the same failure in Japan.

Could BAT grab a piece of Indian Internet market?

I read an article before explaining why India has not produced local Internet giants, such as B.A.T. However, it was written in a macroscopic view and based on India’s economic situation. In this article, the point that I want to discuss is that whether B.A.T. Could find their own positions in India’s Internet Industry.

Let’s first have a general understanding of the current situation of India’s Internet industry. Last year, the GMIC held in India had made India’s Internet industry’s development a hot topic in China’s domestic media. The media even stated India as China of five years’ earlier. From the data collected in last September, India had 0.243 billion Internet users, which makes 19 percent of its whole population; while it had 0.185 billion users of mobile Internet, which makes only 15 percent of the whole population. The data has shown Indian market’s huge potential. But what B.A.T. has anything to do with it.

Google’s share in India’s search engine market has up to 97 percent. Facebook has more than 0.116 billion users in India. Even Facebook Messenger has 53 percent share in Indian market. Apart from Amazon, India’s local online platforms, such as Flipkart and Snapdeal are enduring fierce competitions. Either one of the B.A.T. could march into Indian market without any stop. What’s more, direct confrontation with the existing giants might very well lead to a failure. That leaves B.A.T. two unsolved problems. First, how to enter into Indian market. Second, choose which business to mainly serve Indian users.

In order to solve the first problem, I think B.A.T. should learn from Google. When Google entered India, it first brought its free working environment to India and encouraged Indian talents who helped boosting the prosperity of America’s internet industry to go back to India. Then it created the halo effect for Google staff by not only adding their salaries, but also their social status. Income and social position are quite important in India which has leveled society. Generally, in order to achieve success in India, it is important to adopt localized management which hires local people, adapts local environment and fits into local culture.

Chinese domestic tech giants deeply understand the importance of localized management when conducting business overseas. However, from the operation of Chinese mobile phone makers, such as MIUI and HUAWEI in India, they have just been selling products although they advocated to open experience centers, even factories. With the experience of B.A.T.’s failure in Japanese market, we could tell that cultural integration is far more important than cultural invasion. Microsoft’s strategic layout in China could also be a good example.

Currently, the methods used to enter into Indian market, Alibaba mainly depends on investment, while Tencent bets on WeChat. However, from mobile phone makers’ craziness, once B.A.T enter India, their strategic layout could not just stop there. However, Internet service has much difference than mobile phone business in market invasion. Chinese domestic mobile phone makers mainly depends on low prices to compete with others. Brand recognization or brand culture are just paper talk. Simply to put, there are two ways left for B.A.T. First one, join in the existing competition with Google, Facebook and Amazon in Japanese market in order to bite this “sweet pastry”. Second, copy the experience of O2O and online financial marketing in Chinese domestic market to India. In this way, they will need to confront a series of problems, including market exploration and users habits building. What’s more, Internet popularization in India is not that optimistic.

India is not lack of local Internet talents. B.A.T. could change their tinking patterns to enter into Indian market as entrepreneurs. They could cultivate a localized team and then incubate the service and appliances which serve the needs of the locals. Or they can learn from Yahoo Japan, creating the B.A.T.’s Indian version.

However, compared to European countries and America whose Internet business is rapid developing, B.A.T. is still full of possibilities in India. The Big Three Chinese Internet and E-Commerce Companies have already achieved certain level of success in South-east Asia and South America with underdeveloped Internet industry. India will probably become their next international test field which could not be ignored.

[The article is published and edited with authorization from the author @Alter, please note source and hyperlink when reproduce.]

Translated by Selma Xu (Senior Translator at ECHO), working for TMTpost.