08 September 2016

Tech in Asia: “Why US tech companies struggle in China but thrive in India”

Some of the world’s most successful companies – Google, Facebook, Amazon, and Uber – have turned their backs on the Middle Kingdom and its 1.4 billion people, raising the question: Why have US tech companies consistently failed in China, yet enjoyed relative success in India? What will this mean for India’s startups?

There are three parties that have caused US tech companies to succeed in India whilst failing in China: the consumers (the guys the companies fight for), the local competition (the guys they fight against), the government (the guys that decide whether they get to fight at all).

Tara Kola

Interestingly enough, Apple is the exception here with better business in China (although it’s showing signs of struggle) and weak prospects in India, despite Tim Cook’s investment plans. I think the different outcomes of US tech companies in China and India are impacted by their business models as well. On one side Apple is selling premium hardware, so it’s natural it will find more buyers among people with higher disposable income – and China is definitely ahead of India in that regard. The other companies mentioned here, from Google to Facebook and Amazon to Uber, rely on services and scale to collect revenues, so they’re less sensitive to wealth and more to the number of people they can reach. For them India has an edge because the consumers are much more familiar with Western culture and English language and so easy to target with existing solutions. Having to adapt products in China is making it less lucrative to expand, US companies can reach less people and the local businesses can compete effectively – with the caveat that Chinese companies in turn can’t expand very effectively outside China.

Amazon CEO Jeff Bezos in Bangalore, India
Amazon CEO Jeff Bezos in Bangalore, India. Photo credit: Manjunath Kiran AFP for Getty Images.

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