Exploiting the Chinese exit

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 Exploiting the Chinese exit

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• The Great Internet Wall of China: India has banned several Chinese apps after the border skirmishes with China. China set up a sophisticated censorship apparatus (The Great Internet Wall of China) and banned Western websites and applications years ago. 
• Google’s exit and Chinese domestic opportunity: Google announced plans to pull out of China following a cyber-attack in 2010. Chinese Internet market has grown by 200% to 900 million users since then. 
• China’s censors benefitted China: Chinese sensors did not screen Western content so much as they protected Chinese entrepreneurs, creating an environment conducive to the success of home-grown applications to meet the huge domestic demand for Internet-based services. After proliferation of applications similar to those of BigTechs for some time, Chinese giants such as WeChat and Alibaba quickly produced apps tailored to the Chinese market.
• Chinese variants of popular apps: Baidu became China’s Google, Youku Tudou is Youtube, there is also a version of Instagram, and popular messaging app WeChat now provides news, payments, commerce and social media services too. 
• China’s lead in Artificial Intelligence: Having realized that it had missed the bus on IT outsourcing, China was quick to ramp up its AI development efforts. A 2016 US report revealed that China’s research on neural networks and deep learning was much advanced than that of the US and intellectual property belongs to China. 
• Implication for India: India has a burgeoning Internet market with one of the lowest data costs in the world. China wants access to 500+ million Indians with fresh Internet access to train its AI though usage of TikTok, PUBG worldwide and other Chinese apps. 
• India’s ban: India’s decision to ban Chinese apps has strategic economic importance in addition to geopolitical significance. a) It will direct the focus of Indian IT talent to the fresh domestic Internet market. US and China have been vying for the Indian market but India has always focused on IT exports. b) While India was busy growing IT-exports, Indian market for apps was being addressed by American and Chinese companies. After the ban on 118 Chinese apps, Indian IT talent has begun creating copies of Chinese apps, but this is not enough to take full advantage of China’s exit. 
• Addressing the domestic market: 

1. Specialized services for local markets: Indian entrepreneurs should develop specialised Internet services tailored to the local markets. These could include apps that provide local bus and train routes, education, health, non-traditional banking and lending and more. 
2. Accessibility: These services should be accessible to the local people wherever they go. For instance, an app’s Odiya interface should be available anywhere Odiya people travel. 
3. World class apps: These apps should be world class to be a hit with India’s digitally savvy consumer.  

• Beyond the typical 15%: Tech companies have so far largely focused on the world’s well-off population neglecting close to 85% of the population. Efforts to develop apps for emerging markets have not been significant. India’s experience building local and regional apps for its domestic market, a large part of which is poor can be used to drive export-led growth for markets such as Africa and Latin America. 
• Summary: India’s fresh opportunity to address its burgeoning Internet market after the ban of Chinese apps is similar to China’s success story of home-grown apps and services for its domestic market after 2010. India must create world class hyper local and hyper regional nationally accessible services. This experience can also drive export-led growth in markets such as Africa and Latin America. 

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