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Saturday, February 15, 2020

economic news of india - world economic news - economics news for students - indian economy news

economic news of india - world economic news - economics news for students - indian economy news


What FM needs to do to keep green shoots in economy alive

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Optimism to pessimism—the past week saw the full range of business sentiments in the country grappling with a slowdown. On February 11, Finance Minister Nirmala Sitharaman cited seven economic indicators, like a booming stock market, increased FDI and optimism among purchasing managers, to say that "green shoots" of a turnaround were visible.But a dampener came the very next day when the Index of Industrial Production (IIP) for December 2019 showed that factory output had shrunk 0.3% while retail inflation had risen to 7.59% in January 2020. Then, on February 13, Standard & Poor's retained the BBB- rating for India — the lowest in the investment grade — even as ratings agency predicted better growth ahead for the country. On February 14, a Bank of America report said that as per its India Activity Indicator, while the worst was over "… the bottom is turning out to be is far deeper and longer than we envisaged."Thus, it appears not everyone shares the finance minister's optimism.R Gopalakrishnan, a former Tata Sons director, says: "From my conversations with people in the automobile, auto ancillary, steel and consumer goods sectors, I have not seen any green shoots. I fear the green shoots may well be in the minds of the observer."Beyond IIP & PMIA revival in the GDP growth rate is key to the Indian economy. Economic growth had slowed to an 11-year low of 4.5% in the July-September quarter of the current financial year.The purchasing managers' indices (PMI) for manufacturing and services had brought in a dose of optimism at the beginning of February. At 55.3 for January, the manufacturing PMI was at an eight year high. So how does this high optimism for the future coexist with the IIP contraction of December 2019? 74154571 An economist at a large bank, who does not want to be identified, says PMI is not a relevant indicator for India. The person says some experiments the bank has run with PMI data show the numbers do not quite work in the country.At automaker Mahindra & Mahindra (M&M), chief economist Sachchidanand Shukla keeps a heat map of a long list of indicators to track changes in investment and consumption in the country. He says so far, the heat map has given out a mixed verdict, with only a few indicators, like cement demand, railway freight, air cargo, PMI and central government spending, showing positive change. The negatives are capital goods production, imports and spending by state governments.Indranil Sen Gupta, Bank of America's India economist, says: "Growth in our India Activity Indicator slipped to 3.1% in December 2019 from 4.5% in October-November and 3.15% in August-September. A key driver was the fall in real cash demand due to higher CPI (consumer price index) inflation after a spike in onion prices. Adjusted for this, growth in the India Activity Indicator was still an anemic 3.8%, and 5 out of the 7 components of the indicator deteriorated in December from November 2019."Shukla of M&M says the biggest factor handholding the weak economy is central government spending, which went up 32% year-on-year in the October-December quarter. 74154578 Govt spending the keySudip Ghose, managing director of VIP Industries, too appears optimistic like the finance minister, even though the luggage-maker recorded flat revenue in the October-December quarter. "The Reserve Bank of India has tried to increase liquidity by easing norms for auto and retail lending. The monsoon was good, so the rabi crop should do well. Unlike last year, there are no big elections in the first half of the year either. So from April, things may look better."Shukla, however, says a lot continues to depend upon how much the government is spending. "Going forward, if the central spending weakens, key indicators may weaken too. Yet, the government may target a certain level for fiscal deficit and slow down spending."Rare growth storyOn Feb 12, IT industry body NASSCOM released its annual numbers, stating that the industry would grow at 7.7% in 2019-20 as compared to 7% in 2018-19.IT is among the few industries showing better growth over the previous year. While IT exports grew by 8.1%, the domestic IT market grew at a slower 6.5%. However, this export-oriented sector too is looking at more government spending.NASSCOM chairman Keshav Murugesh told ET Magazine that there is a digital component in nearly all government schemes and the procurement process for them should start soon."We will see various request for proposals for smart city projects. The universal procurement platform is also getting started and for the domestic sector, we feel government spending will provide a boost," he says.The wider body of indicators have thrown up a mixed bag and Sitharaman now has to shoulder the responsibility to keep the "green shoots" alive, through continued spending.

Inside Truecaller's revenue churning plan

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Truecaller has a user base that most apps would kill to have.Among the first movers in the caller identification space, the Stockholm-headquartered Truecaller saw early on that the ability to identify an unknown caller on a mobile phone would be helpful, most importantly in avoiding spam.This insight, combined with smooth execution, has helped the company gain some 200 million users around the world, 70% of which are in India, where "spam is higher than Europe," according to a Truecaller spokesperson.What the app does essentially is create a community phone book on the cloud by harvesting the contact list of its users. It also lets the community flag spam callers, in turn creating a live and evolving map of spammers. As telemarketing and robocalls have become major pain points in India, Truecaller has leaped in popularity.One problem has persisted, however. While the app is widely used, it has struggled to get its popularity to set its cash registers ringing. Despite having been around for 11 years globally and seven years in India, Truecaller reported revenue of just €20 million in 2018. The company claims it turned profitable last year, and its sticky user base is growing 30% year-on-year. But revenue per user is just €0.1 annually. For Google and Facebook, annual revenue per user is between $6 and $8. 74153975 Truecaller is now launching a new business vertical, aimed at turning the revenue tide — credit offerings, especially for small businesses. The thinking goes thus: about half of India's some 45 million small businesses are Truecaller users. The app has insights into those users and can read patterns and signals to conclude who among them needs credit. Therefore the company can probably target credit offerings well. "Truecaller Credit is about providing a platform for lenders to be able to connect with borrowers. It solves a big need because the market is massively underserved. Lending is just the beginning, we may also look to offer other financial services in the future," says Sandeep Patil, MD. A veteran of Flipkart who previously used to oversee strategy at group companies such as Jabong, Myntra and PhonePe, Patil came on board in mid-2019 and will lead the foray into lending. Soon the company will also launch a product called Truecaller for Business, which will allow small business owners to be listed on the platform. This means customers will be able to look up small businesses and get contacts and other information. For Truecaller, making this round of diversification work might be the true test of its potential. Past monetisation efforts have largely floundered over the years, either due to inherent weaknesses, poor timing, or the inability or lack of appetite to burn cash to buy marketshare.Currently, revenues mainly come from advertising and subscription. In advertising, it faces a disadvantage. Unlike other popular apps, Truecaller is mostly running in the background. The app real estate pops to the fore only when a call comes in. The user looks at the screen to identify the caller, and then either rejects and looks away, or quickly answers the call. The real estate is limited and the attention is sparse — not exactly fertile grounds for advertising. The company offers a subscription-based premium service with enhanced features. Only 0.65% of its user base are paid subscribers. While the app offers a chat feature, it hasn't gained much traction, either."The true opportunity for any app is to become a super aggregator of services which are natural extensions of its ecosystem — from messaging to VoIP calling, advertising and financial services," says Ankur Pahwa, partner and national leader for ecommerce and consumer internet at EY India, says.Truecaller started offering digital payments on the back of the Unified Payments Interface (UPI) platform in partnership with ICICI Bank and Bank of Baroda in March 2017 — earlier than several rivals. But as biggies such as Paytm, PhonePe and Google Pay burned mountains of cash to gain market share — over $500 million cumulatively, observers reckon — Truecaller Pay fell by the wayside in that particular race.It is against this history of middling monetisation efforts that the criticality of success in the latest diversification becomes clearer.Credit WoesFor now, Truecaller Credit will essentially be a lead generation business for lenders. Money View, a financial services startup backed by top-flight VC firms such as Accel Partners and Tiger Group, will be the partner. Money View will use Truecaller's platform for lead generation, carry out the diligence and documentation and pass on the loan to a lender. 74153978 Truecaller and Money View will likely split the commission. While the offering will start with a cap of Rs 5 lakh, at scale, it could become a sizeable business.One challenge might be the slightly sneaky perception associated with Truecaller. While users give the app access to their phonebook when signing up, the consent of those contacts themselves is never obtained. This means if X is saved as a contact in Y's phone and Y becomes a Truecaller user, X's details are up on the platform without X ever having consented to it. Because privacy has never been a well-understood notion in India, the platform has thrived. Questions such as who is the legal owner of a number and who needs to grant permissions in such a situation have remained unresolved. In other countries, such a service might face regulatory hurdles.The vague and uneasy perception around Truecaller as an app that tiptoes around the norms of privacy might prove a challenge when it comes to fintech, where trust in the platform is paramount."Users have faith in us as we identify spam. We access data only with users' consent. We don't sell user data and we localise all data in India," says Patil. The market is divided on whether a caller ID and spam blocker app can become a successful fintech player.One analyst, who asked not to be named, is not optimistic. "They are two years late. And when they were early — like in payments — they could not create a dent in the market."While the opportunity is large, the options before borrowers are also many. Lendbox, ZipLoan, FlexiLoans, KhataBook, MoneyTap, KrazyBee and several other startups are offering loans to small businesses. "In financial transactions, trust is key.Here, Truecaller is seen as a bit sneaky, giving information that others don't want to share. Besides, it's not an app on my home screen but somewhere in the background," he says. 74153985 Others are less pessimistic. "Players in the caller ID space have a strong use-base and connect, details on calls patterns and networks, device and location data, etc. Their algorithms can identify who might be in need of credit or source leads. Despite the headroom for growth, it is a tough business because of the number of players and the ability to drive collections, but one should welcome all bets in this space with a mindset of abundance (or opportunity) rather than scarcity," says Vivek Belgavi, partner and leader-fintech, PwC India.Another expert in the payments space, who declined to be identified, says the company could succeed, depending on its execution."Truecaller has a product which people use and even if 10% of their user base takes loans, they will hit pay dirt. There's money to be made in lending (1.5% to 2% commission) and on paper it all looks very good, but it remains to be seen how Truecaller executes it," says the digital payments expert who worked closely with one of the three current leaders in the UPI payments space. Truecaller's Patil says the company is in for the long haul. "We see it as a 100 km race. The landscape is so big, there's room for all."Spam KillerTruecaller's continued success in spamscreening and call-blocking hinges on the spam industry remaining a step ahead of telecom regulator TRAI, which has been trying to clamp down on spammers. As things stand, it looks like spammers will be ahead in the foreseeable future. TRAI's anti-spam effort, which hinges on a do-not-call (DND) registry and an app and SMS service to report violations, appears to be losing the battle.Cheap new connections and free voice calls offered by telcos mean spammers are able to recycle numbers endlessly and disappear off the grid. Only some 30% of India's mobile consumers are registered for DND service. And while reporting violations are easy, not many consumers make the effort.This means Truecaller's relevance in the Indian market is safe in the foreseeable future. "Spammers and fraudsters are a lot faster than DND and other static spam lists," says Patil.As of August 2019, just 1.3 million out of 200 million paid to use Truecaller, available in multiple languages, including Hindi, Marathi, Tamil, Telugu and Gujarati. Free users get basic service — spam blocking that is ad-supported.Paid services at Rs 49 a month or Rs 449 a year give access to premium features like an ad-free experience, advanced spamblocking, auto update of daily spam lists, incognito mode, ability to see who has viewed your profile and call recording. At the top end is the Gold Plan, with all the premium features and priority customer support at Rs 5,000 a year. Given the users' reluctance to pay, and rivals offering free spam removal, it will be a challenge to scale up.While advertising brings in some 75 per cent of current revenues, it has been hobbled by challenges.Truecaller boasts advertisers such as Spotify, Vivo, Zoomcar, KFC and Kalyan Jewellers. It says it can deliver 700 million impressions on an average. "They can use the platform for launching a new car, laptop, or smartphone. We are able to customise the audience as well," says Patil. If a low-end smartphone (under Rs 10,000) is being targeted at tier-2 and -3 residents, Truecaller can help reach out to this set of users.Prasad Shejale, CEO of digital marketing agency Logicserve Digital, says he has had a good experience with campaigns on Truecaller. But there are multiple apps that offer similar audiences and services. This is again an area dominated by players such as Google, Facebook and Amazon."With Truecaller, the ad placement makes it challenging to sell to clients who demand a return on investment that is greater than plain brand awareness or link clicks. Showcasing the brand at a competitive price point in comparison to Facebook and Google ads makes it a tough sell for Truecaller," says Archit Agarwal, digital specialist at The Mavericks India, a Gurgaon-based digital agency.Truecaller has set itself a deadline of 2022 to go public. The challenges it needs to solve ahead of that date are clear. Now it is only a question of whether the small credit diversification can pay off. 74153966

The big chase to find coronavirus killer

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Earlier this week, leading health experts, donors and scientists from around the world came together at the World Health Organization (WHO)'s Geneva office to understand the epidemic of COVID-19 — the disease caused by the novel coronavirus — and look at developing treatment options. They discussed diagnostics, drugs and vaccines that could work against the disease.The treatment options to fight COVID-19 are limited, as it happens with most novel infectious diseases. Public health experts say in the absence of sustained investments by governments — and the lack of interest by pharmaceutical companies to find a cure for infections that impact middle- and low-income countries the most — responses to an epidemic such as COVID-19 become largely episodic.Yet, this time, weeks after the world woke up to the coronavirus epidemic, public health institutes, not-for-profit drug-discovery agencies and even emerging biotech companies have fast-tracked their COVID-19 vaccine candidates into clinical trials. Thanks to the genetic data about the virus, there are already 10 vaccine candidates in various stages of clinical trials. Norway-based Coalition of Epidemic Preparedness for Innovations (CEPI), US government's Biomedical Advanced Research and Development Authority and National Institute of Health as well as India's Department of Biotechnology are hoping to find ways to treat the disease."When you start developing vaccines," says Gagandeep Kang, the executive chair and board member of CEPI, "you don't know if it is going to work. What you have to do is try different approaches. You keep killing projects at different stages so that you wind up with at least one successful project. But it needs to start with seven or eight projects." 74152990 Researchers are experimenting with several pathways — from extending vaccine platforms of other infectious diseases to using the antibodies produced by an infected human body — to fight novel coronavirus. For example, US-based Inovio is looking to extend its vaccine candidate for Middle Eastern Respiratory Syndrome that strengthens the body's immune system to fight a disease. Known as "immunotherapy", this pathway has become a common theme in new cancer medicines. The University of Queensland is working on a "clamping" platform, which stabilises proteins that help the immune system identify foreign elements and trigger a fight against them. Serum Institute of India is teaming up with the US-based biotech company Codagenix. Live-attenuated vaccines, like the ones developed by Codagenix, are ideal in outbreak scenarios as these can be manufactured rapidly and generally require only modest amounts of active ingredients, says J Robert Coleman, CEO of Codagenix.Since the outbreak of coronavirus was announced on December 31, the confirmed cases now stand at more than 66,000, with 1,523 deaths. In India, the 3 students who tested positive for the virus in Kerala have recovered, but three new cases were reported in Kolkata this week.As Indian officials scan airports for infected passengers, the Department of Biotechnology (DBT) is busy on the discovery side. Renu Swarup, secretary of DBT, says they are looking at putting together a group to expedite the research for a vaccine. It is also giving top-up funding to Indian drug makers applying for CEPI research grants to find a vaccine.Despite the rapid developments on the vaccine side, scientists say it will take at least a year for a vaccine to be licensed. So if coronavirus becomes a pandemic — which means a disease spreading to large parts of the world — the world would have no cure. WHO had said the virus was now being considered to be an epidemic with multiple locations. Anthony S Fauci, head of the National Institute of Allergy and Infectious Diseases, who is leading the applied research on infectious diseases such as Ebola, Zika and HIV AIDS, says once a vaccine candidate reaches phase-2 (it takes four months to get to that stage) it will still take eight months to see if it is effective. "Even though we go into trial in three months, a vaccine as a deployable countermeasure is not in the scenario for at least one year," Fauci said.It took four years for the Ebola vaccine to get licenced, says Kang of CEPI. "In Ebola, we got our first answer with a very tiny number of patients because of the ring vaccination strategy (a strategy to inhibit the spread of a disease by vaccinating only those who are most likely to be infected)," Kang explains. If the coronavirus crisis turns serious, she says, regulators around the world will need to rethink their requirement on the number of trials needed to approve a vaccine.The current regulatory requirement to check the effectiveness of a vaccine is to administer it to hundreds of patients. However, scientists are debating whether it is ethical at all to continue trials on larger population during epidemics.Another problem is that even if there is a vaccine candidate out there, companies might not be ready to make it. Companies like GlaxoSmithKline had taken a financial hit while trying to make Ebola vaccines. In 2019, GSK gave away the Ebola vaccine candidate to Sabin Vaccine Institute. In India, too, after the H1N1 virus outbreak, several companies had to destroy their inventories as the virus had died down by the time the vaccines were ready. For drug companies, developing vaccines during an epidemic does not make financial sense.Ronald Klain, who led the Ebola Task Force for the US government, said at a session of the Aspen Institute's conference that companies lose money while trying to make vaccines for such epidemics. "It is the global health organisations that have to step up to de-risk the situation. Because this is an international problem."

BCCI CEO quits, but it’s not official yet

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MUMBAI: Rahul Johri, the first-ever chief executive officer (CEO) of the Indian cricket board (BCCI) who joined office in April 2016, has resigned. However, nobody in the cricket board, including Johri himself, is willing to confirm the development.Sources say Rahul Johri had made up his mind on move on soon after the exit of the Supreme Court-appointed Committee of administrators (CoA).Sources told TOI on Saturday that the Delhi-based Johri had put in his papers "some time ago but it's not been officially acknowledged yet"."He quit some time ago. We have no idea what his plans are in the near future. We don't even know who all he had marked his email to or if he's given it in writing to the office-bearers. But it's certain that he has submitted his resignation," sources said.Johri did not wish to respond to a query from TOI. Asked specifically if he had officially submitted his resignation, the BCCI CEO said he has "nothing to say" on the matter.TOI tried reaching BCCI president Sourav Ganguly, secretary Jay Shah and treasurer Arun Dhumal but they too remained unavailable for comment.Soon after the new set of officebearers were elected in November last year, the Board's chief financial officer (CFO) Santosh Rangnekar had put in his papers. Rangnekar, however, continues to be in office until the completion of his notice period.Johri was appointed CEO of the board in 2016 when Nagpur-based lawyer Shashank Manohar was the president and Himachal's Anurag Thakur the secretary. The then officebearers had hired the services of recruitment firm Korn Ferry to shortlist and interview the candidates from which Johri ended up being the chosen one.Johri had last served as Discovery Networks Asia Pacific's executive vice-president and general manager for South Asia before switching over to BCCI. The appointment of a CEO, back then, was in line with some of the key recommendations made by the Lodha Committee that were ratified by the Supreme Court.

McNally Bharat close to reaching rescue deal

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McNally Bharat Engineering Ltd (MBEL), the stressed engineering company of the Williamson Magor Group (WMG), is close to roping in an Iceland-based strategic investor to tide over the ongoing financial crisis in the company which it believes will be addressed by the end of the current fiscal.Banking sources told ET that ANGCC Capital Management ehf, a member of the ANGCC Global Investment consortium having its registered office at Reykjavik, Iceland, has submitted the final binding term sheet after incorporating majority of the conditions of the lenders including that of the banks.The lenders are currently evaluating the final binding offer and expect to take a final call before end-March 2020 so that the banks can comply with their provisioning norms as per central bank norms, the source said on condition of anonymity.The same investor is also working out the resolution plan of McNally Sayaji, a subsidiary of McNally Bharat, which will solve the problem of the entire infrastructure wing of the Williamson Magor group, the person said.Confirming this, MBEL's CFO Manoj Digga said the company has proposed the resolution plan to its lenders outside the purview of the National Company Law Tribunal (NCLT). The company currently has fund based debt of around Rs. 2,000 crore and non-fund based debt of around Rs. 1,100 crore.ANGCC Capital Management ehf's binding offer will see infusion of funds in MBEL. The move is expected to dilute the promoters' holding, which stood at 43.53 % on September 2019. "We hope to complete the whole process including roping in of a strategic investor and the subsequent, debt-restructuring by end March 2020," Digga said.The banking source as well Digga refused to give details of the binding offer.While MBEL is working to reduce debt and vying for a recast, it has simultaneously roped in Turkey-based Kalyon Insatt Sanayi ve Ticaret as a collaborator to bid for infrastructure projects and thereby improve its financials by end FY21.The current order book of MBEL stands at Rs 1,000-1,200 crore, spread among the power, steel, water and construction sectors. The company clocked a turnover of Rs 127 crore and a negative ebitda of Rs 146 crore in the quarter ended December, compared to the topline of Rs 154 crore and a negative ebitda of Rs 26 crore in the last quarter. The loss is higher in this quarter due to write offs of unrealisable debtors and claims receivables, Digga said.

Auto dealers' body asks vehicle makers to shift completely to BS-VI compliant units

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NEW DELHI: Automobile dealers' body on Saturday asked vehicle manufacturers to shift wholesale despatches to BS-VI compliant vehicles only, with the Supreme Court refusing its request to extend deadline for sale and registration of BS-IV vehicles beyond April 1. The Federation of Automobile Dealers Associations (FADA) said considering the long downturn that has lasted well over a year now and the current dynamic demand situation, selling 100 per cent of the BS-IV vehicles currently in stock with its members by March 31 is a tough task. "FADA, hence, appeals to all OEMs (original equipment manufactures) to shift completely to BS-VI vehicles for all wholesale despatches to dealers and stop further billing of BS-IV vehicles with immediate effect to dealers, thereby helping liquidation of the current BS-IV inventory for a smoother transition to BS-VI," FADA President Ashish Kale said in a statement. In an internal message circulated to dealers, the FADA president also advised dealers to plan liquidation of BS-IV inventory as per March 31, 2020, deadline for sale and registration of BS-IV vehicles. On Friday, the apex court had rejected an appeal by FADA to allow sale and registration of BS-IV vehicles beyond March 31. The stricter emission norm of BS-VI comes into effect from April 1 this year.

Voda Idea assessing what it can pay as AGR dues, to pay shortly

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NeW DELHI: Vodafone Idea said it is assessing what it can pay the government as part of its statutory dues, and plans to pay it in the next few days."The Company is currently assessing the amount that it will be able to pay to DoT towards the dues calculated based on AGR (Adjusted Gross Revenue), as interpreted by the Hon'ble Supreme Court in its order dated 24 October 2019. The Company proposes to pay the amount so assessed in the next few days," said the telco in a statement on Saturday. Vodafone Idea has to pay Rs 53,000 crore of dues and was jolted when Supreme Court on Friday tore into telcos for not paying their AGR dues by January 23. The telco, however, cautioned that its future remains dependent on the court's call over modification plea, which now has been listed for March 17. "The company's ability to continue as a going concern is essentially dependent on a positive outcome of the application for modification of the Supplementary Order," it added.

Entire industry moving towards zero broking model: BSE CEO

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New Delhi: While the zero brokerage model is catching up fast in the retail equity broking industry, Ashishkumar Chauhan, head of one of the leading stock exchanges raised concerns on the sustainability of earnings for the industry."Entire broking is going towards zero brokerage model. The margin has collapsed close to zero in terms of trading," Ashishkumar Chauhan, managing director and CEO of BSE on Saturday said addressing the audience at ANMI's International Convention in Delhi."You are running so much but earning nothing," Chauhan said.Zerodha, the discount broking firm is the leading brokerage firm in the industry.In a bid to grab a larger share of rapidly growing discount-broking market for securities, retail-focused stockbroking firms have introduced similar products in recent times to raise their game.Last year, brokerages such as Axis Direct and Angel Broking came up with discount broking offerings, alongside their existing products in an attempt to lure customers away from established discount brokers. They are also offering research services bundled with these products.PayTM Money, the investment and wealth management arm of mobile payment platform Paytm, is also launching its discount broking platform soon.Separately, Chauhan said the currency trading segment and bond trading segments were doing well on BSE.He added that BSE was moving towards higher-margin verticals such as bonds and MSMEs (medium, small and micro enterprises).

China's mobile and digital dominance run deep into Indian economy

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Sometime in 2019, India overtook the US to become the second largest smartphone market in the world, after China. Of the 158 million units shipped (meaning made available in the Indian market), around 114 million, or 72%, were Chinese brands, said Counterpoint Research. Xiaomi led the pack, with Vivo, Realme and Oppo figuring among the top five, according to figures released in January. It's been an astounding market share grab, considering most of these brands have not been in India for more than a few years.Chinese companies are now major players in a number of consumer segments. Lenovo is a heavyweight in computer hardware, Haier is inching up the league table in white goods. Huawei's domination in telecom equipment is strong and its leadership in 5G technology, in particular, is absolute. In auto, 2019 saw a blockbuster entry for MG Motor, with its Hector SUV. A number of major Chinese automakers are now rolling into India.Chinese companies are beginning to dominate in some digital segments as well. ByteDance-owned TikTok is a sensation in India. ByteDance plans to invest $1 billion in India over the next few years. Alibaba owned UC Browser, too, has significant users in India. Hangzhou-headquartered ecommerce player Club Factory is expanding its reach to tier-2, -3 and smaller cities in India. Investors such as Ant Financials and WeChat owner Tencent have picked up stakes in large digital players such as Paytm and Zomato. PUBG, one of India's most popular mobile games, is owned by Tencent.This is just the picture on the consumer-facing business. In business-to-business supplies, China is perhaps the most important trading partner for Indian businesses today.The emerging picture is rather remarkable, considering the geopolitical unease that exists between India and China. The robust $87 billion in trade between the two countries sit sill at ease with a history of aggressive border disputes, memories of a war and China's open support for Pakistan, including in international fora. In fact, at various points, India has asked its military personnel to refrain from using Chinese devices or apps, or both. Now Chinese companies are everywhere — from telecom infrastructure to handheld devices and the most popular apps. Perhaps nowhere in the world do two countries with such geopolitical suspicions on the one hand also share such deep trade links on the other.Thinking GlobalGlobally, as in India, China has managed a remarkable turnaround in perceptions — from a supplier of cheap and poor-quality products, its companies have won the world's grudging respect. This has been achieved through strategic intent and global acquisitions.For instance, Lenovo was only a big player in China before it bought IBM's hardware business and emerged among the largest computer sellers globally. British brand MG Motor and Scandinavian Volvo are among the marquee brands that have been acquired by Chinese companies.Much of China's global scale and success in commerce goes back to the 1990s when free trade agreements resulted in zero-to-low tariffs, and China focused on becoming the lowest cost producer and invited American and European companies to set up their manufacturing capabilities."China makes inferior to good products across segments to cater to different price points and needs. So from cheap plastic toys, festive lights and wristwatch dials to computers, smartphones and solar panels, Chinese companies play across segments," says Hitesh Sawhney, partner and leader of the China business group at PwC India.Commoditisation at ScaleChinese domination in tech products has been fuelled by its ability to commoditise at scale. China produces at scale and becomes the cheapest supplier of a particular commodity — be it phone cases, batteries, electronic components or solar panels. Nokia, for instance, used to be a dominant maker of mobile handsets. It used proprietary technology. Later with cheap chip sets from China and Taiwan, as well as customisable Android operating system, the entire ecosystem became commoditised. The same process has been replicated in computers, washing machines, air conditioners, microwaves and other products.Chinese industries also enjoy active state support. If the US imposes tariffs, the government ensures that industry can tweak supply chains to reduce costs and remain competitive."China as a country approaches commerce with strategic intent. In their planning and economic thinking, it's about how do we maximise value addition. That means higher GDP and more jobs," says George Paul, CEO, Manufacturers Association of Information Technology (MAIT).Even in areas where Chinese companies don't have advantages of scale, they are willing to invest to create the market. For instance, ecommerce in India seems like a two-horse race between Amazon and Walmart-owned Flipkart. That has not deterred Chinese ecommerce player Club Factory from investing. In recent months, it has increased its penetration in smaller towns in Uttar Pradesh, Telangana and Bihar and offers sops to onboard sellers. "Local talent is key to our success. We are hiring local employees and also scaling up operations to connect with the masses," says Vincent Lou, founder and CEO of Club Factory.Carpet BombingIn smartphones, after Nokia lost ground, Indian companies, including Micromax, Lava and Karbonn, stole a march, but they could not innovate or invest in R&D. Later, Chinese companies, including Xiaomi, Oppo, Vivo and Realme, stole their thunder. Anshika Jain, research analyst, Counterpoint Research, says: "Chinese companies launch devices across price points; others hold on to their sweet spot." Realme has 14 products in the market. Even carmakers such as SAIC and Great Wall Motors plan to bank on a portfolio of multiple products at different price points to attract buyers. "They will replicate their success in smartphones in the car market," says Paul.Besides Chinese companies take a 360-degree view and study what drives local sentiments. Vivo is a major cricket sponsor. OnePlus expanded by word of mouth. They also innovate relentlessly. Triple and quad cameras are now available in sub-Rs 20,000 devices from Chinese brands.Eric Braganza, president, Haier Appliances India, points out that the Chinese strategy is to break up an organisation into micro enterprises — say, create 40 branches of one organisation, each with qualitative and quantitative targets. And then scale up all of them.The large ecosystem also supports growth, like easy access to capital. "Chinese advantage is product financing," says Rajan S Mathews, director general, Cellular Operators Association of India (COAI). He adds, "In India it's absolutely critical. Local manufacturers don't get it as banks in India are not keen." Once Chinese win markets, they don't increase prices (like in smartphones, computers etc). They are happy holding on to their volumes as they know if they increase prices, someone with a cheaper offering could upset their equation.As investors, Chinese have begun to show aggression in India in the last couple of years. While Alibaba's Ant Financial has been investing in India for a while, rival tech superpower Tencent has got more active recently, closing 10 deals in the last eight months alone. It has invested in edtech startup Doubtnut, Byju's, insurance aggregator PolicyBazaar and B2B ecommerce portal Udaan, besides Swiggy, MXPlayer (owned by Times Group, publisher of this newspaper), My-Gate, Dream11 and others. Globally, Tencent has invested in 800 companies, of which 70 are publicly traded and around 150 are unicorns.Now with labour costs rising in China (labour is now relatively cheaper in India), a large domestic market and availability of skilled talent should help Indian companies start competing better.

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