An emerging community of Chinese entrepreneurs are investing in India’s future
V Shoba | 19 Jan, 2017
THE IDEAS ARRIVED before they did. In peppery dissent against bland, overpriced smartphones designed in Silicon Valley, a new breed of Shenzhen- born devices shredded Western illusions of China as a mere manufacturing hub. Plucky entrepreneurs reimagined modern life with their not-just-chat apps and their experimental hardware and made the world feel more uniform. Copycats who didn’t have a new idea to shill built sizeable empires, laughing off Western intellectual property laws. Investors wore the red carpet ragged on their global shopping sprees, annexing everything from football clubs and heritage bars in the UK to property and high technology in America. For this new, battle-hardened generation of Chinese businessmen, India was the next land of fortune. Prominent Chinese investors like the Alibaba Group, Tencent and Ctrip have poured hundreds of millions of dollars into India’s most sensational start- ups—Paytm, Snapdeal, Hike, Practo and Makemytrip—and may yet back many up-and-coming internet companies. Their sustained interest, at a time when the Chinese economy is slowing down, is inspiring young, adventurous Chinese to explore opportunities in India’s business and tech centres, particularly Bengaluru and Gurgaon.
The story of Chinese capital in India is well known, but the story of Chinese entrepreneurs and professionals trickling into the country is yet unfolding across WeChat groups, in apartment-offices in Bengaluru, and on hush-hush business recces of Indians metros. “Over the past year that I have been here, at least 50-60 Chinese companies have visited Bengaluru and requested that I show them around,” says Hu Tu,an entrepreneur and Chinese venture capital professional who ran a technology media startup in India called Onionfans for a few months before shutting it down on account of high costs. “Some of them, including a 20-year-old tech company, are considering setting up offices here. Others are put off by how far behind Indian cities are in terms of infrastructure,” he says. I paraphrase, for Hu Tu speaks in halting English, often looking up Google Translate and writing down words for me. Despite the obvious barriers to starting up in a foreign land, he talks animatedly about why India is the place to be. At his apartment in Domlur, Bengaluru, three A4 sheets of paper with the names of the top 300 Chinese startups are taped to a wall in a bare bedroom. I mistake the list for a source of inspiration, a connection, perhaps, to home, but a closer look reveals cryptic markings. Some names are underlined, other crossed out and yet others ticked off. These companies are a proof of concept for what can succeed in India, says Hu Tu, who wants to replicate at least one of the star startups in India. “Community fora for, say, new mothers, advanced sharing apps and hyperlocal delivery can present big opportunities,” he says.
Amazon and Flipkart give you maybe two pictures for each product. Delivery takes too long, service is terrible. Indian ecommerce has a long way to go
Hu Tu believes that not just Chinese capital, but Chinese professionals who bring with them their unique work culture and processes will enrich the Indian startup ecosystem. Shuffling in his black tracksuit, he hurries back to his living room-cum-office, bare but for a table and some chairs. Light filters in through the balcony, setting the wood floor aglow. He logs on to Taobao, Alibaba’s ecommerce marketplace for China, and scrolls through the men’s apparel section. I do not need to read the logographic script to understand the point he is trying to make. Each product listing on Taobao comes with dozens of pictures, diagrams for size and shape, details of fabric and texture highlighted in bold colours, and the number of times it has been bought. It is like the endless scroll on entertainment websites you cannot stop squinting at. “You see? Amazon and Flipkart give you maybe two pictures for each product. Delivery takes too long, service is terrible. Indian ecommerce has a long way to go,” Hu Tu says. Quality, packaging, millennial-friendly marketing and free gifts are the tenets of building a good internet brand in China today, a case in point being that of Anhui Three Squirrels, a nuts startup that is well on its way to becoming a $1.5 billion titan by creating mascots with teenage personalities to sell—purchases are referred to as ‘adoptions’— premium nuts that come packaged with a tissue, a nutcracker, disposable gloves and a trash bag to boot. “What if India could have a brand like that?” Hu Tu asks with a satisfied smile.
Upon Hu Tu’s urging, I install WeChat, Tencent’s wildly popular application that marries the best of messaging, wallet, taxi hailing, reading and shopping apps. It becomes my primary channel of connecting with Chinese expats who are unsure of their English. Many want to keep a low profile, citing the global media’s tendentious view of China. (“Write about our bullet trains instead of calling for boycott of Chinese goods.”) Others ask if the article will be published in Chinese, likely wondering about the consequences of being interviewed at a time when the State is tightening its grip on intellectual liberties. Soon, I am part of a close-knit community of about a hundred Chinese entrepreneurs, traders and tech industry professionals who are preparing for an upcoming event in Bengaluru. Many find time to meet me. Midas Peng and Viola Lee, a chirpy 40-something couple from Taiwan who run health camps for IT majors like Tech Mahindra and IBM, are hopeful of expanding their two-year-old business, given the modern Indian techie’s changing lifestyle. Yuan Qing, a young service manager at Huawei on his second visit to India, says he has had to constantly push Indian suppliers of office furnishings and equipment to deliver their best but he is in awe of the simple joys of life in India—“a cup of masala tea at Rs 2”—accessible even to the poor. Zhongyu Fang, 28, who first came to India as a student eight years ago and returned in 2015 to open a Sichuan hot-pot restaurant on Bengaluru’s busy Church Street, is happy to be booking profits already. “When I was studying Computer Science at Dayanand Sagar College of Engineering, there were hundreds of Chinese students, but no professionals. Today, it is the other way around,” he says, rattling off statistics on Indian GDP growth and demographics ahead of lunchtime at New Leaf Restaurant. “Half our clientele is Indian.”
Until a couple of years ago, I had plans to open 100 stores across India. Now I need just a few to showcase the brand; 30-40 per cent of sales have shifted online
It is the first Saturday of December 2016 and they meet at a business hotel off Cunningham Road in central Bengaluru to formally launch a Bangalore Chinese Chamber of Commerce. Representatives of Oppo and Vivo—Chinese smartphone companies that have seized the budget phone market from the hands of Samsung and homegrown brands like Karbonn—hobnob with businessmen in dark suits while politely refusing interviews citing language barriers. QR cards are exchanged, hundreds of selfies clicked, speeches made and jokes traded. Mike Zhang and Will Zhou, two young men representing Country Garden, one of China’s biggest property developers, are in the best spirits as they talk about possible investments in Bengaluru, Mumbai and Delhi. “Nothing is final yet, so we are not supposed to talk about it. We are scouting for large parcels of land to build self-contained cities with premium residences,” Zhang tells me. Others are less discreet about Country Garden’s plans for India. “It’s a China town, built over 2,000 acres on the outskirts of Bengaluru,” says a businesswoman. “If this project comes through, it will further motivate more Chinese people to move here.”
Housing, however, is the easiest thing to figure out, as the Chinese working out of their airy apartments in Diamond District, Bengaluru, well know. But overcoming language and cultural disparities and plowing through bureaucratic process are not nearly as simple. “You need a bridge,” says Charu Purohit, a stylish woman of Chinese origin and indeterminate age—“closer to 40,” is all she will say—who is a repository of cautionary tales about businesses that couldn’t make it in India. Married to an Indian, Purohit is ji••jie (older sister) to fellow Chinese in Bengaluru. One afternoon, she pulls up in a golden Grand i10 outside an ATM in Mico Layout where we arranged to rendezvous. I assume we are driving to the closest of her three offices in the city, but we halt at a Mughlai restaurant she frequents. She is the picture of cultural assimilation, ordering vegetarian sizzlers and kadhai paneer and roti in Hindi. In a sheath dress and black stockings, her long hair pulled back into a ponytail, she talks, between forkfuls of food, about the 500-odd Chinese residents of Bengaluru—over 1,000 if you count the floating population of corporate travellers. “For Chinese people, much of India does not make sense. They cannot hope to crack the market unless they understand it,” she says. Building on her experience in corporate China and her years in India—she moved here in 2006 and worked at Oracle—she set up a business to help Chinese companies gain a foothold in India. ACN Global, she says, has helped 50 companies, most of them trading and manufacturing units, set up an India office in the past two years. “We study the market, organise visits and meetings with local suppliers and distributors, and run the business for you without requiring you to register the company. If it works, we help you build a company and scale up,” she says. The Chamber of Commerce was her idea. “I spent my first two years here eating noodles and feeling homesick.
But now when I go to Shanghai, I miss the warmth. My son could be wailing as I struggle to handle my luggage at the airport, but no one will cast a second glance at me, let alone help,” she says. She cannot imagine driving her Grand i10 back home. “To be taken seriously as a businesswoman, I’d have to drive a BMW, wear designer clothes and travel with a secretary. I’d have to cultivate a personality,” she says. “In India, there is no such baggage. That’s what I tell people who want to move here.”
To be taken seriously as a businesswoman in China, I’d have to drive a BMW, travel with a secretary. In India, there is no such baggage. That’s what I tell people who want to move here
Indians and Chinese are more alike than they know, says Li Jun Jie, proprietor of Ni Hao! (Chinese for ‘hello’) Fashion, a shop on Church Street that stocks trendy Asian clothing and accessories. Imposing Western business structures on the uneven columns of a developing economy is hardly a sound approach, he says. “If I want to improve my golf game, I would rather learn from a coach who is my own height than from someone much taller.” Li Jun Jie has been in Bengaluru longer than anyone else—nine years. Engaged to an Indian who is also his business partner, he says Indian shopping is going the China way, but at a much slower pace. “Until a couple of years ago, I had plans to open 100 stores across India. Now I need just a few to showcase the brand. Ever since we launched a website about a year ago, 30-40 per cent of sales have shifted online. Our shoppers are between 18 and 25 years of age, and technology is fast gaining acceptance among them,” he says. His only grouse is that despite being called ‘Indo-Chinese’, he must exit and re-enter the country every three months due to India’s stringent visa regulations for Chinese citizens. “Chinese are not in the habit of questioning rules, so we don’t talk about this. It is a huge and costly inconvenience,” he says.
“It is not about geopolitics anymore. The two most important economies of the future will mutually benefit from doing business with and learning from each other,” says a young Chinese co- founder of a startup that is in beta testing, requesting anonymity. At a time when it is no longer easy to compete in China, India presents a rare opportunity for entrepreneurs like him, he says. While things are not up to Shenzhen speed in Bengaluru, its reputation as India’s talent hub and the success of homegrown startups are a source of hope. “We want to bring India’s commercial streets online,” says the entrepreneur, asking me to test out his app, a straightforward e-shopifying engine. Funded by a Chinese accelerator and some friends, the startup has seven employees in China and three in Bengaluru, besides three others who work part time from his apartment. “Part of the reason I am hopeful is that Indians are just as hard-working as Chinese,” he says. More Chinese startups in India will mean more jobs for Indians, he points out.
“I am not running a Chinese startup. It’s a proper Indian company,” says 33-year-old Wan Hong, co-founder of Krazybee, a consumer goods micro-financing platform targeted at students. “Not one of my 50 employees is Chinese.” Wan speaks English with an Indian accent and has visited over 20 India cities, spending much of his time trying to understand what Indian college students want. The fintech startup enables students to pay for their phones and computers in instalments by tying up with ecommerce partners and offering loans at nominal interest. “India is a country where you need a local as a partner. I don’t think I’d do a better job than my partner,” Wan says, referring to his co-founder and CEO, Madhusudan E. The two worked together at Huawei. Within a year of its founding in 2015, Krazybee has crossed 100,000 customers and gives out over Rs 2 crore a month in loans. From four cities, it will soon scale up to 5-10 more cities. All this has been possible because Wan Hong spent five years at Huawei India before quitting to start up. Krazybee has a Chinese equivalent, Fenqile, that launched at about the same time as Wan’s venture. “It is not easy for Chinese entrepreneurs to enter a new geography like India, but it could be more rewarding in the long run,” he says.
The rewards in India have been so phenomenal for Chinese smartphone companies that they don’t mind overshooting their marketing budgets and paying inflated commissions to distributors, says an Indian product manager at Oppo, Bengaluru. “India is the only strategic market left,” he says. “And the Chinese are here to stay.”