Bangalore,December 7 2016: Cheetah Mobile, a leading developer of mission-critical mobile utility applications, recently released an India-China Internet market comparative report. The report is based on the research conducted by Cheetah Global Lab and provides invaluable insights into two of the biggest mobile markets in the world. It covers:
- The current status of India’s internet market and the opportunities it has to grow Barriers India needs to overcome
- Top 100 apps being used in China and India
- Rankings of apps in E-Commerce, Car hailing, Food delivery and News categories
Some revealing insights:
According to the G20 National Internet Development Report, India’s internet user base grew by 51.9% in 2015, the fastest growth rate of all member states. Conversely, growth in China’s internet user base has slowed significantly as China reaches the tail end of its so-called demographic dividend.
TALENT: According to a report by global management consulting firm McKinsey, every year India has 1.5 times as many college graduates as China. Moreover, India is rich in IT talent. This is evident in the number of ethnic Indians in American internet companies compared to the number of ethnic Chinese. In recent years, Indians have even become executives of major American tech companies, including Microsoft CEO Satya Nadella and Google CEO Sundar Pichai. Moreover, four of Google’s 13 board members are of Indian descent. In 2012 ethnic Indians accounted for 33.2% of tech company executives in Silicon Valley.
According to a 2014 report published by LinkedIn, five of the top 10 cities with the most IT talent can be found in India.
POLICY: Compared to China, the Indian government has a relatively open attitude towards foreign internet companies. There are very few licensing requirements. Even sensitive industries like telecommunications are open. In March 2016, India approved a law allowing 100% direct investment in a platform-style e-commerce companies, but it still limits foreign investment in self-operated e-commerce companies. Compare this situation to China where companies like Google and Facebook are still prohibited from entering the market.
China & India’s Top 100 Apps: China’s mobile app market is very unique. Facebook, Google, eBay and Amazon have all tried to develop the Chinese market, but every one of them has failed. All of the apps in China’s top 100 list are published by Chinese publishers. This is not simply a result of strict local regulations. It’s more a matter of foreign companies having trouble adapting to China’s unique consumer culture and fierce competitive environment.
The majority of India’s mobile app market is controlled by foreign app publishers, mainly American and Chinese publishers. Of India’s top 100 apps, only 29 are published by local companies. This shows that U.S. and Chinese publishers look at India as a land of opportunity. In the future, the competitive environment in India’s mobile market will become even fiercer than China.
e-comm: India’s 1.3 billion people are a very attractive target for the e-commerce industry. According to market consultancy firm RedSeer Consulting, annual online sales in India are expected to reach $80-$100 billion by 2020. India is currently recording about $13 billion in annual online sales.
Within the context of limited consumer purchasing power, during the last few years, India’s e-commerce platforms have consistently burned capital on discounts to retain customers. India’s e-commerce industry is stuck in this pitfall with no way of pulling itself out at present. Although many Chinese e-commerce companies such as JD.com burn through capital, they spend it on building up their logistics or on capital improvements. The way Indian companies are burning through capital to offer discounts in an effort to attract customers foreshadowed market integration in China. Once investors are no longer willing to invest in a company anymore, that company either withdraws from the market or is swallowed up by another company.
Overseas e-commerce brand Amazon has launched a fierce offensive in India. A June 2016 Nielsen survey showed that Amazon is the most well-liked e-commerce brand in India, followed by Flipkart.
There are currently two apps in India’s top 20 that have connections to Chinese companies, including News Republic, acquired by Cheetah Mobile, and UC News, developed by UCWeb. Two other apps with Chinese connections that didn’t make it into top 20 but that are highly ranked are NewsDog and Hotoday.
IDC’s data shows that Chinese smartphone shipments to India are increasing. Vivo, OPPO and Xiaomi each shipped 1 million units to India in the second quarter of 2016. This had previously only been achieved by Lenovo. Xiaomi’s shipments to India increased 72% in the second quarter, with the company’s low-end Redmi 3 performing especially well. IDC points out that the Redmi 3 is the best-selling phone online in India and it’s also Xiaomi’s best-selling phone in the quarter. By comparison, shipments by transnational and local Indian mobile phone manufacturers dropped on a year-on-year basis in the same quarter.
It is widely believed that data in India is very cheap compared to China, but if you look at data fees as a percentage of GDP, data fees in India are higher than in China.
Complex Language Situation
All apps in the Chinese market use a single language, but India has approximately 200 languages in addition to English, including more than 10 mainstream languages. Moreover, not even 30% of India’s 1.3 billion people speak English. Having numerous languages is a nightmare for foreign internet companies. It is even a problem for local companies because it means more development costs.
Even though in some ways the Chinese and Indian internet markets are technically in competition with each other, their relationship is actually mutually beneficial. As the Chinese market becomes more saturated, India is the first market that many Chinese companies target overseas. At the same time, India’s internet market development benefits from Chinese investment and expertise.
In the mobile internet era, mutually beneficial cooperation between China and India is preferable to competition. When Chinese President Xi Jinping visited India earlier this year, he mentioned that China has been labeled the “World’s Factory” while India has been labeled the “World’s Office.” The two sides should strengthen cooperation and complement each other’s advantages.
Full study here China-India Internet Market Comparative Report.