For years the Chinese Dragon viciously guarded its economic turf and never allowed foreign players to enter and grow within it. Not only China sealed all economic opportunities for itself in the age of globalisation, but also nurtured key players like Bytedance Ltd, Tencent Holdings, etc, to grow in an ecosystem where online giants like Facebook, Google or Microsoft had no say. But with the Indian government banning 59 Chinese apps, including TikTok, UC Browser and WeChat, following the violent face-off between the Chinese and Indian troops at the Line of Actual Control (LAC) in eastern Ladakh on 15-16 June, in which 20 Indian bravehearts died, tech watchers say China has made a big mistake and the Xi Jinping government should brace for a big digital downfall.
The importance of these digital companies could be gauged from the fact that despite Covid-19 pandemic which crippled the economy worldwide, ByteDance Ltd’s (TikTok’s parent company) valuation crossed more than $100 billion. Similarly, Tencent holdings (one of the most valuable companies in the world), which develops apps like WeChat, QQ Messenger, League of Legends, etc, earned a revenue of over $500 billion this year. Sources say the ban is likely to make a major impact on three fronts — data security, economic blockade of China and opportunities to Indian companies.
With this ban, Bytedance Ltd likely to suffer the most. TikTok h a s b e e n removed from world’s third-largest digital market with 611 million downloads (30% of TikTok’s total users). It is estimated that this will make the Chinese giant lose revenue of half a million per day. This ban has also given the US an edge over the Dragon in global tech market. With this, American companies like Facebook, Google, etc, are expected to see a boost. The sting will definitely hurt the Chinese for long as they are expected to lose around $110 billion.
Meanwhile, the government has also tightened its grip around Chinese companies like Huawei and sources say these companies might lose India’s 5G bid as well. The government is also thinking about a possible ban on Chinese companies, especially telecom operators and mobile companies soon. Apart from this, rules are also being formulated to reduce import of Chinese products.
India is the 3rd largest digital economy, and without access to this market, Chinese companies’ valuation will go down significantly. Even if they come back in the future, their customer acquisition cost (CAC) is going to skyrocket, many will simply surrender and fold back to China. Ankit Prasad, CEO and founder, Bobble AI, said, “This ban can have a domino effect as well, encouraging other democratic markets to make similar bans. Though the impact is going to be both ways. The pro-active investments from China that have been happening over the last couple of years are going to reduce drastically. Indian startups would be left with fewer choices and sometimes onerous terms to raise funds from, and many ideas might not see the light of the day.”
Sources also say that the ban will also give opportunities to Indian players to build a network of home-grown world-class mobile apps for 1.3 billion Indians. Boxengage. com, which was launched as a Indian alternative to Tiktok during the lockdown, saw a massive 10X surge in activeuser mark within 24 hours. Short video content app Woovly too gained 2,000 followers within a short span. Similarly, VideoMeet app for video conferencing too picked up and is now seen as a possible alternative to video conferencing apps.
Industry watchers believe this is a once-in-a-lifetime opportunity for desi companies to cement their place at a time when nearly 300 million Indians are on Facebook, another 400 million on WhatsApp, and over 120 million on Chinese app TikTok — not to forget the millions who are hooked to Twitter, Instagram and Snapchat. Ironically, despite such a big market, there has not been a single Indian social media platform with a global standing.
Amid all this, the regional language social media platform ShareChat is showing the way. ShareChat has a user base of over 60 million monthly active users spread across the country and available in 15 languages including Hindi, Tamil and Bengali. The Bengaluru-based regional language social platform has become so popular that even Twitter came onboard when the four-year-old company raised $100 million in its Series D round of funding last year.
Public is a video-only social platform and has already registered 50 million users, with more than one million videos being created every month. “It is now on our entrepreneur on how well we can utilise this as an opportunity and build solid businesses. It may not fly that well if we don’t get the right and timely support system for scale, most important would be capital. Indian companies with less capital access also may sustain and flourish now and provide better opportunities to create great products not just the copycats of those Chinese app substitutes,” said Sumeet Verma, CEO & co-founder, KopyKitab.