If you have kept pace with the previous stories from our China Week series, one thing is clear. There is a lot of interest from Chinese investors to back Indian startups. From large conglomerates like Tencent and Alibaba to several smaller largely-unknown institutional and corporate VCs, it wouldn’t be wrong to say that Chinese investors are actually lining up to put their considerable muscle to aid startups in India.

So what explains China’s love for India?

Conventional wisdom tells you that bullishness on India is pivoted on this popularly-held belief that India is the ‘next China’. That India is on the cusp of an internet revolution with a potential market of hundreds of millions of users ready to come online to spend their time and money. An adage that finds prominent mention in many a funding pitch deck is that “India is where China was ten years ago”.

But is this really true?

India is not China

Despite being somewhat similar in terms of size, development stage and culture, India is nothing like China. Specifically, when it comes to startups. Unlike their Chinese counterparts, Indian companies do not have the advantage of a protected domestic market where foreign behemoths are kept out and the government supports startups, both actively by funding as well as passively by providing aid in the form of regulations and other soft infrastructure subsidies. For an Indian startup to emerge as the dominant company in a particular sector, it has to best foreign behemoth competitors like Amazon or Uber. Not a trivial challenge by any means.

So India is different from China in some respects but still, the formidable size of the Indian middle class is a tempting proposition as a potential market, right?

Pundits routinely bandy about numbers such as 450-500 million as the size of the online population in India but if you scratch the surface, the numbers are not quite as inspiring. For instance, according to a recent study by AT Kearney, only 39 million people in India have ever bought something online. According to this study, “The Global Retail E-commerce index”, this number means that India does not even figure in the top 30 e-commerce markets in the world. Other studies peg the number of transacting users at a maximum of 60 million. Keep in mind that this figure is what we have achieved after spending billions of dollars in discounts and marketing, evangelising the supposed benefits of online commerce.

How does this 60 million figure compare with China?

According to a Bernstein report, there are 450 million e-commerce users in China. More importantly, even at this scale, the top lines are growing.

700 million Chinese were online at the end of 2016, versus a population of approximately 1.4 billion. According to projections by Euromonitor, internet user growth in China will rise from 50% in 2015 to nearly 75% by 2020 as connectivity via broadband and 4G improves.

AUTHOR

Sumanth Raghavendra

Sumanth is a serial entrepreneur with more than eighteen years experience in running startups. He is currently the founder of Deck App Technologies, a Bangalore-based startup attempting to re-imagine productivity software for the Post-PC era. Sumanth’s columns appear regularly in leading publications. He holds MBA degrees from the Indian Institute of Management, Bangalore and Thunderbird, The American Graduate School of International Management, USA.

View Full Profile

Available exclusively to subscribers of The Ken India

This story is a part of The Ken India edition. Subscribe. Questions?

MOST POPULAR

Annual Subscription

12-month access to 200+ stories, archive of 800+ stories from our India edition. Plus our premium newsletters, Beyond The First Order and The Nutgraf worth Rs. 99/month or $2/month each for free.

Rs. 2,750

Subscribe
 

Quarterly Subscription

3-month access to 60+ new stories with 3-months worth of archives from our India edition. Plus our premium newsletters, Beyond The First Order and The Nutgraf worth Rs. 99/month or $2/month each for free.

Rs. 1,750

Subscribe
 

Single Story

Instant access to this story for a year along with comment privileges.

Rs. 500

Subscribe
MOST POPULAR

Annual Subscription

12-month access to 150+ stories from Southeast Asia.

$ 120

Subscribe
 

Quarterly Subscription

3-month access to 35+ stories from Southeast Asia.

$ 50

Subscribe
 

Single Story

Instant access to this story for a year along with comment privileges.

$ 20

Subscribe

Questions?

What is The Ken?

The Ken is a subscription-only business journalism website and app that provides coverage across two editions - India and Southeast Asia.

What kind of stories do you write?

We publish sharp, original and reported stories on technology, business and healthcare. Our stories are forward-looking, analytical and directional — supported by data, visualisations and infographics.

We use language and narrative that is accessible to even lay readers. And we optimise for quality over quantity, every single time.

What do I get if I subscribe?

For subscribers of the India edition, we publish a new story every weekday, a premium daily newsletter, Beyond The First Order and a weekly newsletter - The Nutgraf.

For subscribers of the Southeast Asia edition, we publish a new story three days a week and a weekly newsletter, Strait Up.

The annual subscription will get you complete, exclusive access to our archive of previously published stories for your edition, along with access to our subscriber-only mobile apps, our premium comment sections, our newsletter archives and several other gifts and benefits.

Do I need to pay separately for your premium newsletters?

Nope. Paid, premium subscribers of The Ken get our newsletters delivered for free.

Does a subscription to the India edition grant me access to Southeast Asia stories? Or vice-versa?

Afraid not. Each edition is separate with its own subscription plan. The India edition publishes stories focused on India. The Southeast Asia edition is focused on Southeast Asia. We may occasionally cross-publish stories from one edition to the other.

Do you offer an all-access joint subscription for both editions?

Not yet. If you’d like to access both editions, you’ll have to purchase two subscriptions separately - one for India and the other for Southeast Asia.

Do you offer any discounts?

No. We have a zero discounts policy.

Is there a free trial I can opt for?

We don’t offer any trials, but you can sign up for a free account which will give you access to the weekly free story, our archive of free stories and summaries of the paid stories. You can stay on the free account as long as you’d like.

Do you offer refunds?

We allow you to sample our journalism for free before signing up, and after you do, we stand by its quality. But we do not offer refunds.

I am facing some trouble purchasing a subscription. What can I do?

Please write to us at [email protected] detailing the error or queries.