Geo-political tension is brewing, once again.
* The context
Well, technically the rising tension levels between China-India began just in June during the Himalayan border clash in which 20 Indian soldiers were killed, and India imposed stricter curbs on Chinese goods and businesses amid calls for boycotts.
In July, India began raising the stakes and began banning Chinese apps, such as TikTok (often caught in geo-political fights, this one) and about 50 others.
The India ban is a big blow for Chinese app providers in one of the world’s largest app markets. India’s vast internet penetration rate, with almost 700 million users as of 2020, is a gold mine for tech companies.
• The Alibaba story
Alibaba, which has fueled the growth of several Indian start-ups like payments giant Paytm, will not put in fresh funds to expand its investments in the country for at least six months.
However, there are no plans to exit or reduce any existing investments. Alibaba & its affiliates have invested more than $2 billion in Indian companies since 2015.
Indian start-ups are heavily funded by Chinese investors such as Alibaba and Tencent. Chinese tech giants have been looking to bolster their presence in the country with an aim to grow their revenues outside China.
• Why is this important?
The six months waiting period is probably to wait and see how the India-China tensions play out. Alibaba is also closely watching US-China tensions as it readies for a dual IPO for Ant Group in Hong Kong-Shanghai.
As big tech becomes globalised, they increasingly rely on global relations, and geo-political tensions can serve as a make or break for tech companies, as we are seeing for TikTok in the US. What else? Indian startups have also benefitted from an influx of Chinese capital, which have contributed to its reach and growth.
It’s become clearer than ever that tech companies’ international wins is very much contingent on stable international relations, as many platforms can now be used as pawns in the political blame game.
