Firms which are keen on testing Indian waters include Changyou.com, Alibaba’s online retail company Aliexpress and e-commerce firm JD.com

Chinese online gaming, advertising and commerce companies are increasingly attracted to India as the number of mobile Internet users in the country expands rapidly, a top executive said.

“There is a massive interest from Chinese firms. Most large Internet companies we met in China are interested in India,” said Rajan Anandan, managing director of Google India and chairman of industry lobby group Internet and Mobile Association of India.

Anandan recently led a delegation of 23 Indian Internet firms to China where executives met officials from Chinese e-commerce and Internet companies including Alibaba.com, travel portal ctrip.com, Google China, mobile browsing firm UCWeb and smartphone maker Xiaomi.

China’s online gaming company Changyou.com Ltd is expected to soon launch some of its products in India. The company started ChangYou.com India Pvt. Ltd in 2012 and launched its first Indian product mobogenie in mid-2013. Mobogenie offers an application that helps people manage their Android smartphones through personal computers.

Firms other than ChangYou which are keen on testing Indian waters include Alibaba’s online retail company Aliexpress and e-commerce company JD.com.

“Chinese mobile companies have two choices. Either they can go east or west. It makes a lot of sense for these companies to come to east and capture the mobile market as India could potentially have 700 million connected smartphones in next two-three years,” said Manish Vij, founder and chief executive of Smile Vun Group, an Indian digital media network. Vij was part of the delegation that spent five days in China.

As per IAMAI’s I-Cube report, there were 243 million Internet users in India in June with a growth rate of 40%. In 2013, China had 618 million personal computers and 500 million Internet users.

“By 2016, the numbers are estimated to grow to 790 million for PC and 690 million mobile Internet users,” Anandan said at a media briefing in New Delhi on Wednesday. “A major part of this growth in China is happening via smartphones and tablets and we see similar trends in India.”

Though the numbers are small compared with China, Anandan sees a huge opportunity for India.

“Mobile browser companies, gaming and advertising companies that have become large in China, all want to come to India,” said Vij.

“Indian market for mobile phones,Internet services is scaling up now. These companies have the option of coming in now when the opportunity is there and grow with the market or come in four years later when there are already established winners. But if you have to establish a strong market share it is better to come in early,” said Harish H.V., partner, Grant Thornton India LLP, a consultancy.

Harish expects many Chinese device makers to continue to enter India, given that country’s big manufacturing presence. “They are not big in the software space though their mobile applications can do well in India, as we might find better fit with Chinese rather than western companies.”

Like in China, consumption of entertainment and gaming applications will be huge in India as smartphone penetration continues to grow, he adds.

According to Satyan Gajwani, chief executive, Times Internet Ltd, e-commerce, digital content and advertising are the big opportunities in India. “The US is saturated and in China the story is playing out already. China is pretty similar to India with respect to connectivity mechanisms and mobile first,” he said.

Gajwani believes that faster than expected growth in Indian mobile consumption has attracted the attention of Chinese firms.

It is not, however, clear if these companies would come to India via strategic partners or make stand-alone entries.

“These companies are fuelled enough to enter alone. I am not sure if it is important for them to do a strategic tie-up, as they have the capital and experience of operating in a bigger market,” said Vij.

Earlier in July, China’s largest smartphone maker Xiaomi entered the Indian market. Companies like UCWeb, an Alibaba Group company that provides mobile Internet software and services, were among the first few mobile Internet companies to enter India in 2011.
The article appeared in Mint. The article can be found here.