India Vs. China: Same-Same, But Different. But Still Same.

Why has China been able to produce and scale up companies like Alibaba, Baidu and Xiaomi while India continues to struggle in comparable companies like Flipkart and Micromax? Is Great Firewall the key in allowing early Chinese tech companies to scale by insulating them from global competition? My hypothesis is YES.

Indian companies, because India is a democracy, are not only constrained by global competition, but also by changing governments every 5 years, each bringing a different approach to protectionism and/or liberalism. Flipkart’s ‘last man standing’ strategy was very effective in gaining market share from Snapdeal and other ecommerce players, till Amazon with it’s bigger war chest came along. Did absence of a global behemoth like Amazon enable Flipkart to build a strong defense which it could turn into offense when it was ready to take on global competitors? Did Xiaomi’s entry into the Indian market completely kill Micromax’s ability to scale into a global company? Or would lack of competition have made Micromax and Flipkart complacent to the point where they never tried hard enough. Management books would say latter but the Chinese ecosystem provides overwhelming experience of the former to be true.

Another aspect that worked out for Chinese (and Russian ecosystem to some extent) is that English is not the primary language in China which meant global startups trying to enter China had that as a barrier to entry along with understanding local problems before they could devise local solutions. In India, given that large part of urban India does speak English, startups like Uber could come in and directly compete with local rivals for customer’s share of wallet.

Let’s be clear, I am not proposing communism along with complete protectionism as way forward, this article is my attempt to understand why China, a very comparable country to India is able to produce startups that are now scaling up against global competitors while Indian startups are taking a bit of a beating even in the local market. Will global competitors continue to dominate tech commerce play in India like they seem poised to be doing or will this force Indian startups to start leading from its strengths (tech talent) and start focusing on serious technical innovation like Israel does? One thing is for certain, for India to continue to compete successfully (and win) it will likely have to continue to develop unique businesses and products that break away from the ‘me-too’ mold of western companies more and more, as China slowly has.

I, Ravi Sangtani (@sangtani_ravi) am co-founder of Startup Journey and also Director of Targets Corporation’s Accelerator program out of India. The views presented above represent my position at Startup Journey and do not represent Target Corporation’s point of view in anyway.

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