Baidu plans to buy stakes in Indian start-ups
What's the story
Baidu, the Chinese internet search giant, is looking to enter the Indian market and is in talks with Zomato, Bookmyshow and Big Basket to purchase 'strategic stakes' in them. It also plans to expand its app-store, MoboMarket, to position it as an alternate to Google's Android Play Store. It will focus on Hindi and vernacular languages to tap the growth in smaller cities.
Introduction
Company profile - Baidu
NASDAQ listed Baidu, is a $60 billion behemoth that is often regarded as the 'Google of China' (Google is blocked in China). Founded in 2000 by Robin Li, it dominates the internet search engine space in China. It is based out of Beijing, China and is now planning to expand to other territories. The MoboMarket, its app store already has 45,00,000 users in India.
Quote
Baidu to focus on India
"India has a large base of internet users and this is moving up rapidly. Baidu sees the country as a strategic market, and we will have a big focus here." - Tim Yang, head, Baidu India.
3 Dec 2015
Why is India the focus?
With 402 million internet users, India has surpassed US (375 million) and stands next only to China (600 million). According to World Bank,iInternet penetration in India is still 18% (2014) much lesser than China's 50%, signifying a huge potential for growth. While the growth slows down in China, India will face a broadband revolution driven by smartphones and the mobile internet market.
Information
India's conducive startup ecosystem
India, with 4200 startups, ranks third in the global startup ecosystem only after US and UK.
Challenges
A difficult path ahead?
Analysts believe that valuations in Indian startups appear a little high and a correction is due. While this may prolong the negotiations, it is unlikely to deter the Chinese investors including Baidu to tap the booming market in India. With India increasingly turning into a battleground for digital companies from US and China, Chinese companies would try harder to maximize their geographical proximity advantage.