Government of India announced banning Chinese apps like TikTok, WeChat, and 57 other apps. However, apps like PUBG (wholly owned by Tencent) and Ali Express, among many others have been spared. Here’s the list of banned apps.
The one thing common between these apps is that they all face Indian consumer and actively collect consumer data. The leader among the pack, TikTok, is being shunned for their data collection practices globally. Comes as no surprise that this move by the government is right after the news of China planning to launch cyber attacks on India. But is this ban good for India?
A quick pulse survey that I ran among my friends literally indicated a 50:50 for the decision among 120 voters. Considering the sample bias of most of my friends being more economic growth oriented, I expected a more negative response. So, is India banning Chinese apps good?
Maybe it’s for the best!
The colonial concept of globalisation as a one way street has run its course. China never allowed any interference in their local market which helped with immense value and wealth creation from local businesses. And after developing a strong local demand, expanded to other countries. While Indian startups fought hard to find ground in the market. In the early days of TikTok/Helo, Sharechat and Roposo were the reigning champions of social network for India 2.0. ByteDance (parent company of TikTok) burned over millions of dollars on a net basis per month to gain market share, cornering Indian startups with lesser capital. The same never happened to TikTok in Chinese market, because a Sharechat was never allowed in the first place.
One step back with globalisation means ten steps back in terms of the consumer experience. After all, TikTok has the followership they do because the product is flawless and very consumer friendly. No video making app comes remotely close to the TikTok experience.
For startups this is a great opportunity to create huge outcomes and rule the domestic market. But, for consumers this is a step back.
Tech industry needs to be less controlled for innovative ideas to bloom. But the industry also needs capital and regulatory support to expand in a tough market like India. So, overall this decision indeed is for the best!
Do we need China more than they need us?
Sadly, yes! In 2018-19, India had a trade deficit of USD 53.56 billion with China. Last year, US surpassed China as the leading trade partner for India. But the dependance on China for trade is still too high. A huge chunk of the deficit is in the manufactured goods sector and not in technology, and this ban doesn’t have direct implications on the trade but it can severely affect the bilateral relations. And who knows what can come next?
China has a much stronger domestic market with robust demand, while India is still finding its feet. If left alone in an isolated setup, China will probably grow much faster than India. Which is why, India can’t afford to be in a world moving towards anti-globalisation while China might.
This can lead to so much more
It is the worsening relations between the two countries that is bothering most people. What if China retaliates by declaring a trade war and stopping imports and exports into India? Or what if Indian government decides that this was just Step 1 and there’s more to follow?
Earlier this year, India had stepped up the scrutiny on investments by Chinese companies in the country. This can impact VC and PE investing into Indian startups not only by Chinese funds but also by big global funds like TPG, Carlyle, etc who have Chinese LPs and investors. While that decision was outright more wrong than right, India banning Chinese apps is a more mixed decision, tilting towards right.
How China retaliates to this ban is the cause of anxiousness among most people, but how to capitalise on this ban is the adrenaline for our startup founders. Eagerly waiting to see these new white spaces being filled up by Indian tech companies!