A paper ban made ClubFactory's India investment plan press the pause button.
Nine months ago, the founding team of ClubFactory, a cross-border e-commerce platform focusing on the Indian market, had talked with a reporter from China Business News about the prospects of the Indian market.
At that time, ClubFactory was the third-ranked e-commerce platform in India, and it had invested hundreds of millions of dollars in local operations, customer service, and warehousing.
The sudden ban caught most entrepreneurs going overseas in India by surprise.
Affected by this, the Indian headquarters of ClubFactory will lay off staff, the third-party cooperation between customer service and warehousing is facing cancellation, and the two new offices that were originally planned to be opened are also stranded.
"In this battle, we are forwards, and we may also fall." The founding team of ClubFactory said in an open letter to all members.
In a long list of bans, ClubFactory's encounter is just the tip of the iceberg.
A reporter from China Business News found that some overseas entrepreneurs chose to stop related services in India, some chose to lay off employees to minimize their operations, and some turned their attention to markets such as Europe, America and Southeast Asia.
Li Tao, the founder of APUS, who started going overseas in 2014, told China Business News that overseas companies will still experience a period of "entanglement" in the next six months.
"The Indian market is like a cake trap." A practitioner who has been following India's mobile Internet for a long time told a reporter from China Business News. It seems that the population is huge and the potential is not small, but short-term realization is very difficult. The cycle of large factories layout It will be longer, "So no matter whether you choose a short-term suspension or a retracement, you can understand it."
So, is going to sea still a good business?
Indian version of "Dunkirk Retreat"
"False news".
This was the first reaction of Li Jialun, the co-founder of ClubFactory, after seeing the news of the ban from an Indian colleague on June 29.
After contacting several Chinese teams that were also on the banned list for the first time, he discovered that everyone was not clear about what happened.
Prior to this, ClubFactory had hired more than 100 Indian employees in the Indian market to be responsible for localized operations, had a customer service team of thousands of people, and set up four warehouses in Delhi and Bangalore, India, with more than 400 warehousing personnel.
In the next period of time, management began to discuss how to deal with this emergency situation.
However, the Indian market situation has not improved until today. The company has begun to shift its operational focus to Southeast Asia, Pan-Middle East, Africa, Europe and other countries with adjacent regions and similar cultures. "The East does not shine, and the West shines. The world is our real stage. "The founder of ClubFactory said in an open letter.
Similar to ClubFactory’s experience, when he saw APUS’s name appearing on the list of 59 Chinese apps banned in India, Li Tao made a decision: Chinese employees withdrew, remotely controlled, and Indian market operations were operated on a minimal scale.
APUS started by going overseas with tool products. The number of users in India is not small, accounting for 10% of its total users.
Li Tao told a reporter from China Business News that in the past, APUS had a flexible development and operation team in India, with 50 people as short as possible, and more than 200 people at most.
"India's ban was expected, but the practice was unexpected." Li Tao told reporters that as early as 2017, India had a similar ban list, but at that time, "the thunder was heavy and the rain was little." I did not expect this year. , To implement in a true sense in a "large-scale, one-size-fits-all" approach.
He estimated to reporters that the loss of APUS users in India is controlled within 5%, "because (the company) itself has no income in India."
Since Google and Facebook have adjusted their platform strategies in the past few years, APUS’s overseas strategy has been continuously adjusted accordingly. On the one hand, it has shifted from tool-based products to content and games, and built its own sales system; on the other hand, it has evolved from the original emerging countries to T1 countries (referring to countries with faster Internet development such as Europe, America, Japan and South Korea) are the focus of revenue.
Li Tao said that the T1 countries are relatively mature in terms of user habits, payment channels, and payment habits. The user's Arpu value (average income per user) is relatively high, and mobile devices are relatively advanced, which can support more application scenarios. The income is relatively large.
Not only that, the domestic sinking market has also become an area where APUS has begun to expand.
According to APUS officials, its total number of users exceeds 1.4 billion, 69% of which are currently distributed in 65 countries and regions along the “Belt and Road”, and users in Europe and the United States account for 20% of the total global users.
Similarly, affected by the Indian government's ban on Chinese apps, the short video platform Likee of Huanju Group also fluctuates in the Indian market.
A company insider told reporters that Huanju Group has begun to shrink its marketing expenses in the Indian market, focusing its business on other emerging markets and developed countries.
Liu Jiaoyue, vice president of Time Technology, who has been abroad for 12 years in India, told China Business News that the areas most affected are games, short videos, and live broadcasts.
At present, there are three types of "self-help" methods for everyone: one is to transform themselves into an Indian company to continue to explore the Indian market, which requires the cooperation of local Indian agents; the other is to immediately change directions, or change products into multiple product lines at the same time Development, or change the region to open up new markets; the third is to wait and see and wait, waiting for an opportunity to make a comeback.
According to public data, India’s GDP in 2019 is equivalent to China’s 2006 level, the scale of Internet users is equivalent to China’s 2012 level, and the game, advertising, and e-commerce markets are equivalent to China’s 2005, 2007, and 2004 levels. s level.
From the perspective of monetization, India and China are more than 10 years away.
"Many users but not making money" is the evaluation of many people going overseas for the Indian market.
"For Chinese Internet companies, the Indian market is more of an investment stage, and it has not yet reached the output stage, and the entire market is still too early." TouchPal founder and chairman Zhang Kan told reporters, consistent with most people going overseas. He believes that although the Indian market has a demographic dividend, its performance in terms of payment is not satisfactory.
Li Tao gave an example to reporters that the Arpu value of an Indian user is extremely low, and the average Arpu value of an American user is 50 times that of an Indian user.
He bluntly said that he does not recommend early Chinese entrepreneurs to go to the Indian market because the local consumption power is weak and the network facilities are poor. For entrepreneurs, they must invest enough money, time, and patience to grow with the Indian market, just like It is a "gamble".
He predicts that in the next two to three years, various volatility risks and events will continue, and overseas companies may experience a period of entanglement, "but there will be a quiet period before each outbreak, and everyone will keep brewing and searching. New opportunities." In addition, an important overseas strategy in the future should be to go to the sea in a group, "to allow the entire upstream and downstream supply chain to move forward hand in hand."
Second half game
Compared with entrepreneurs, investors are more calm about the Indian market.
Lin Meihan, founder of Yinxing Capital, began to pay attention to the Indian market in 2017 and founded Yinxing Capital.
Lin Meihan believes that India is not a “quick money” market. For a long time, investors and entrepreneurs must first judge whether the industry has a future in India before considering whether to come to India, and then consider what kind of Way to enter India.
She believes that the mobile Internet, especially consumer Internet and online medical industries, will grow rapidly after the epidemic in India.
For the hard-working Indian market, most entrepreneurs are still looking for solutions.
The banned company is working with other affected companies in government lobbying work, hoping to obtain a legal settlement, and the "survivors" are beginning to pay attention to the company's potential risks.
In a recent online dialogue with a reporter from China Business News, Wang Jie, the head of the Zhejiang Kenting lawyer’s overseas business, suggested in the dialogue that the company should first check the contract performance and main terms of its partners and upstream and downstream suppliers. Carry out sorting and investigation to determine the potential risks.
Secondly, we must handle the upstream and downstream relationships between users and advertisers, try our best to comfort users, provide timely notices and notices on the official website, and make relevant plans.
Once again, we must do a good job in product privacy data compliance risk investigation. From entering the market, we must investigate a series of data collection, processing, storage, etc., and if we have the ability, we can do compliance investigation and assessment of the entire life cycle of data. .
Wang Jie believes that the Indian market has great potential but there are also many challenges.
First, the low transparency of the Indian market leads to information asymmetry.
Second, the gap between the rich and the poor is huge, the consumption structure is single, the overall consumption power is insufficient, and it is difficult to realize products.
In addition, the Indian market is also faced with opaque regulatory policies, obvious local characteristics of law enforcement, and the diversity and complexity of Indian languages.
After the Chinese app was banned, Lin Meihan observed that many pure tool apps began to have local imitators, and some Indian investors even openly encouraged entrepreneurs to develop competing products on social media.
Local Indian employees laid off by major Chinese companies are also popular in the Indian market.
Lin Meihan told a reporter from China Business News that employees who have received complete play training in Chinese companies will be more experienced and more popular than purely local employees. This is a consensus in the industry.
"Chinese entrepreneurs and Indian entrepreneurs have a complementary relationship. Indian entrepreneurs know more about the local market, while Chinese entrepreneurs know more about product operation methods and growth models." The epidemic and the sudden ban policy have indeed brought India's venture capital market. There are certain challenges, but Lin Meihan believes that the Indian venture capital market should be able to usher in a better turning point in the second half of next year.
Zhou Shuren, senior product director of Unitime Technology, is optimistic about the development of financial technology in the Indian market.
He believes that the economies of the two countries will still move towards cooperation, the dividend period of the Indian market is still in its early stage, and the market potential is huge.
"As long as the market does not become saturated, there will still be opportunities under the conditions of the future improvement of the general environment, because the Chinese model is already very mature and everything is ready, and it only owes east wind." Zhou Shuren told reporters.
Author: ▪ Qiu Zhili Liu Jia