India retaliated by banning ByteDance’s hugely popular video-streaming app TikTok and 59 other Chinese apps on national security concerns.  Not that

Can India afford to boycott Chinese investors?

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2020-07-03 05:47:14

India retaliated by banning ByteDance’s hugely popular video-streaming app TikTok and 59 other Chinese apps on national security concerns.

Not that silly of India because this significantly narrows a top growth market for Chinese technology firms and may embolden other governments to shut them out.

The popular mobile app features snappy, shareable videos, often catering to teens and other young people. Using filters, sounds, music and hashtags, young Indians upload songs, dances, pranks, comedy skits, career tips, challenges, language and yoga lessons.

Interestingly, the blacklist excludes India’s most valuable startups, including the US$16 billion payments giant Paytm, backed by Ant Financial, as well as education star Byju’s, which counts Tencent as an investor. Alibaba and Tencent also invested billions of dollars into other Indian startups such as Zomato, Big Basket and Ola. In total, 18 of India’s 30 unicorns have Chinese funding, Gateway House, a Mumbai-based thinktank calculates. But new investment rules and rising anti-China sentiment may slow the overall flow of capital from the People’s Republic and that will hurt growth.

India and China have also become increasingly integrated in recent years. Chinese giants deeply “embedding themselves” in India’s socio-economic and technology ecosystem, according to Gateway. “There have been more than 90 Chinese investments in Indian startups, most of them made over the last five years. Eighteen out of 30 Indian unicorns [tech startups valued at over $1bn] have a Chinese investor,” says Amit Bhandari, an analyst at Gateway house. At $6.2bn, direct Chinese investment in India appears relatively small. But, Mr Bhandari says, restricting Alibaba and other Chinese tech giants from creating monopolies in the Indian market will be crucial given the “outsized impact” of these investments. India has already amended its FDI (foreign direct investment) rules to stave off hostile takeovers of Indian companies.

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