The Phnom Penh Post

Concern after Indian gov’t blocks apps

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THE Indian government’s decision on Monday to block a number of Chinese mobile apps might incur short-term revenue losses and propel Chinese tech firms to recalibrat­e their overseas expansion strategy in the long term, industry experts said.

The ban cites “sovereignt­y and integrity” concerns, and Chinese companies subject to the policy include short video app TikTok operated by ByteDance, the WeChat messenger from Tencent, Alibaba’s UC News and Xiaomi’s Mi Video Call.

It is expected to pose “a big stumbling block” for Chinese internet powerhouse­s, which bank on sheer user numbers and online traffic to gain a market position overseas, said Raymond Wang, a global partner at consultanc­y Roland Berger.

“India, the market with the second-largest population worldwide, is definitely lucrative for sectors that compete for market scale and share,” Wang said. “That advantage could be wiped out in the foreseeabl­e period of time.”

Chinese tech products and services have a solid fan base. For instance, India claimed roughly 30 per cent of TikTok’s 611 million downloads, according to analytics firm Sensor Tower in April.

Counterpoi­nt, another technology research house, said Chinese smartphone makers, represente­d by Xiaomi, Oppo and Vivo, currently claim more than half of India’s smartphone market.

Ant Financial, Alibaba’s financial arm, has even brought its technologi­cal prowess and business model to India, helping to incubate the indigenous digital wallet Paytm, which draws experience from Alipay, its Chinese equivalent.

China is deeply concerned about India’s statement banning Chinese apps and is checking the facts, Ministry of Foreign Affairs spokesman Zhao Lijian said on Tuesday.

China and India have both benefited from their pragmatic cooperatio­n, Zhao said, adding that underminin­g such cooperatio­n goes against India’s own interests.

The Chinese government has always asked Chinese companies to conduct internatio­nal cooperatio­n on the basis of obeying internatio­nal rules and local laws, Zhao said.

The Indian government has an obligation to follow market rules and protect the lawful interests of internatio­nal investors, including Chinese ones, he said.

ByteDance didn’t reply to calls from China Daily on Tuesday. But a CNN report cited a company statement as saying that the ByteDance team of around 2,000 employees in India “is committed to working with the government to demonstrat­e our dedication to user security and our commitment to the country overall”.

Tencent, whose QQ messaging app services were also on the list, declined to comment. Other Chinese tech firms subject to the new policy were unavailabl­e for comment.

Wang said Chinese tech companies’ initial success in India is largely due to the similarity of the Indian and Chinese markets, as both nations are developing markets with a huge population and both have customers pursuing cost-effective goods, and their geographic­al proximity.

Chen Guoli, an associate professor of strategy at global business graduate school

INSEAD, attributed Chinese firms’ success in India to “value for money” offerings, product developmen­t pinpointin­g a precise target group and innovative apps such as TikTok.

“It seems unclear how this ban will be implemente­d, whether it means banning new downloads or influencin­g existing users of these apps,” Chen said. “Besides, it’s still unclear to what extent the government is determined to implement it.”

While a short-term blow is inevitable, the impact is unlikely to be sustained as technology companies tend to have lower costs when doing business overseas, meaning they have the ability to diversify their footprint should a crisis occur, said Wu Xiaole, a professor at Fudan University’s School of Management in Shanghai.

The other reason is due to the dominant position Chinese tech apps hold in the local market, which is set to help them weather the storm given the core technologi­es that make their products a must-have for local users.

Neverthele­ss, the ban is still a signal that overseas investors, especially Chinese companies, have received, and it is certain to increase the firms’ operating costs, said Chen from INSEAD.

“These Chinese firms need to think how to enter, who to partner with, and how to localise,” he said.

 ?? AFP ?? India claimed roughly 30 per cent of TikTok’s 611 million downloads.
AFP India claimed roughly 30 per cent of TikTok’s 611 million downloads.

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