Not just tech start-ups, Chinese presence extends across sectors

The figures reflect China’s deepening stake in the country
If you thought the Chinese have only put their money into buying stakes in technology start-ups, think again. According to a Brookings India study, in the two years of 2018 and 2019, Chinese companies in India together invested, or announced plans to invest, over $9-10 billion in many sectors ranging from infrastructure, real estate, and automobiles to consumer durables and energy.

The figures reflect China’s deepening stake in the country. In 2018, the big area of investment for the Chinese was in energy. Last year, it was infrastructure. 

The study, by Ananth Krishnan, a visiting fellow at Brookings India, was released as part of the think tank’s Impact Series, March 2020 and reveals some interesting trends. Till 2014, the total Chinese investment in India, according to Chinese Ministry of Commerce, stood at $1.6 billion. By the end of 2017, this had jumped to $8 billion. The huge spurt was part of a broader Chinese surge in outward investment between 2013-16 which saw its outward investment nearly double from $107.8 billion in 2013 to $196.1 billion in 2016. 

For Chinese investors, 2014 was an inflection point. A survey conducted in 2017 of Chinese investors by the Industrial and Commercial Bank of China, showed that around one-third of today’s 800 Chinese companies set up operations in India that year. 

The bulk of them, about three quarters, were private enterprises. Only 10 per cent were joint venture companies. The main sectors were manufacturing and infrastructure though, with time, after 2016, the tech sector became important with companies such as Alibaba and Tencent making big bets on Indian start-ups.  According to the same survey, more than half of the companies projected a five-year window from 2017 to 2022 as an opportunity to invest in India.

 

Real estate has also caught the fancy of the Chinese but it’s turned out to be a mixed story. The Wanda group, for instance, has made numerous abortive attempts to enter the country, once with Anil Ambani and once in Haryana when it announced it was investing $10 billion in the state. But neither of these took off.
There have been other deals. The Fosun group has taken a majority stake in a property development platform that has been formed by the realty developer Ahuja Constructions. 

 
Golden Gate and the state-backed China State Construction Engineering Corporation have entered into joint ventures for property development.  

In infrastructure, two competitors in the construction equipment space happen to be battling it out in India. Chinese giant Sany set up the biggest plant outside China in Pune where it has invested over $86 million and lords over the truck crane market. 
Its rival Liugong is not far behind, using India as an export hub for exporting construction machinery to Africa.
In the auto space, apart from SAIC which has made its presence felt strongly with M G Motors, there are others such as BYD which is looking at the electric vehicle market. BYD is planning a joint venture with the Hyderabad-based Gold Stone group to manufacture electric buses and cars.

India’s telecom and consumer electronics industries are already popular with Chinese players. In mobile devices, Chinese players dominate and are setting up assembly plants to cater to the domestic market.  Likewise telecom equipment. Huawei and ZTE already have a 35 per cent market share and are investing large sums of money in R&D.  

 
The fact remains, however, as experts point out, that despite straddling all these sectors, it is in the technology start-up sector that the Chinese have had perhaps the biggest impact.

According to a report by Gateway House, Chinese companies have invested over $4 billion in Indian start-ups. In just five years up to March-end 2020, as many as 18 out of 30 unicorns are Chinese-funded. The question, in the current climate, is whether these investments can withstand the escalating tensions between the two countries. 


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