Not long ago, almost all American companies tried to break into the lucrative Chinese market, but due to the tremendous changes in recent months and political tensions, China is no longer the number one for American companies seeking to make a fortune overseas. The BRIC countries (Brazil, Russia, India and China) have always been the target markets for international expansion by some of the world’s economic powers. However, as some European and American countries are targeting China, the political situation in Brazil continues to be turbulent, and the friction between Russia and Western governments is changing.
Ambitious companies are starting to look for other markets, such as Indonesia, Mexico, South Africa, and Malaysia, and India may now be their preferred target. For many years, India looked like a profitable economy, but it never seemed to reach its potential. But the current situation is beginning to change. Reliance Jio has completely subverted India’s connectivity market, popularized the mobile Internet for the Indian public, and embarked on a challenging path of digital transformation. In contrast to China, Huawei’s situation is not optimistic due to various reasons.
Huawei is in a difficult situation
After the new round of sanctions against Huawei by the United States, on July 14, British Telecom officially announced the ban on Huawei equipment, and requested that all new business cooperation with Huawei be stopped before December 31, 2020, and all telecommunications operations in the UK will dismantle all Huawei equipment currently in use before 2027. As soon as the news of Huawei’s ban came out, British official spokesperson Oliver Dawden explained that “this is a difficult decision. Economically, it is a correct decision.” This means that after the United States, the United Kingdom has turned Huawei out of the door for security issues. This time, the 20-year cooperation between Huawei and the United Kingdom is about to end. On the 9th of this month, Italy’s largest telecom operator Telecom Italia announced that it had excluded Huawei from the company’s bid for core 5G network equipment built in Italy and Brazil. Subsequently, the President of Huawei Italy responded in an interview: Unlike the “political decision” in the UK, Telecom Italia’s decision is commercial.” In addition, according to foreign media reports recently, according to three people familiar with the matter, the French regulator has already noticed to telecom operators who plan to purchase Huawei’s 5G equipment: Once the equipment expires, they will not be able to renew the Huawei equipment license, which is equivalent to actually prohibiting Huawei from participating in the country’s 5G network construction before 2028.
Silicon Valley companies take the lead in entering India
In recent months, American companies have begun to invest in Indian companies. The most obvious investment is the telecom operator Reliance Jio. On April 22, the social media giant Facebook became the first company to invest in the digital business unit of Reliance Industries, acquiring 9.9% of the shares at a price of US$5.7 billion. Later, many companies began to purchase its shares one after another, of which 78% of the cash came from the United States, including technology giants Google, Qualcomm, and top private equity capital Silver Lake, Vista Equity Partners, General Atlantic, KKR, sovereign wealth fund Mubarada Investment Corporation, and Abu Dhabi Investment Authority.
Investors of Jio Platforms
It is not just Reliance Jio that attracts the attention of Internet giants. According to reports, Google has also been negotiating investment ideas with Vodafone Idea, while Microsoft and Amazon have already cooperated with telecom company Bharti Airtel. In addition to the above, many other investments have also begun to enter India. Netflix has been investing heavily in localized content in India for many years; Apple has also been trying to redeploy manufacturing capabilities; as a prelude to expansion, Google recently announced a $10 billion investment in India, which has attracted the attention of major media. There are four key points (interconnection, localized products, SME growth and artificial intelligence).
A new starting point for India’s digital economy?
For many years, others have been talking about India’s potential, but is it ready now? The figure below shows India’s per capita salary and 4G users in recent years, which can reflect the country’s development prospects to a certain extent.
Unit: Rupee (Exchange rate: 1 RMB is approximately equal to 10.7 Indian Rupee)
Recently, according to Indian media reports, Mukesh Ambani, the richest man in India and chairman of Reliance Industries Group, announced that its Jio Platforms already has its own 5G technology and is ready to deploy it in 2021. Ambani said that after receiving the 5G spectrum, Jio Platforms’ 5G technology will be tested. Once 5G equipment is approved in India, Jio Platforms will provide 100% Indian-made 5G systems to other operators around the world. However, some media pointed out that the so-called 100% purely domestically produced 5G technology in India’s core components and systems are all products from overseas communication equipment companies. After India returns home, it will be assembled locally, and some locally-made non-core components will also be inserted. Today’s India can be regarded as the United States in 2010. In the Indian market, the application economy is still in its infancy, SMEs are still in the pre-digital transformation stage, and consumers have not yet achieved digital monetization. For Internet giants, this is what makes India exciting: a large number of potential users are ready for digital consumption, and companies such as Facebook, Google, Apple, Netflix, Microsoft and Amazon are ready to move. For India, the world’s second most populous country, is this a new starting point?
