Our reporter Wang Chuanhong reports from Beijing
In the past, Tencent, which frequently took shots in Southeast Asia's venture capital market, seems to have to reach out to Indian e-commerce giant Flipkart.
Recently, a number of foreign media reported that the "financial version of Jingdong," Flipkart new round of financing has been finalized: Tencent will be one of the investors. According to information disclosed by Bloomberg, this is a financing amount of up to 1 billion US dollars, participants include Tencent, eBay and Microsoft, in addition to news that Flipkart is planning to continue to raise funds in the short term. Bloomberg also disclosed that the valuation of Flipkart in the round of financing declined from $15.5 billion in 2015 to $10 billion.
Tencent told reporters in the 21st Century Business Herald that they would not comment. At the other hand, Alibaba.com recently increased its shareholding in Indian appliance giant Snapdeal. The two domestic Internet giants have continued to bet on the Indian and Southeast Asian markets.
Tencent stake in Flipkart?
As early as February of this year, there was news that Flipkart was seeking a new round of financing, and Tencent has been on the list of investors in this round. However, it is still not possible to know the specific circumstances of this investment, such as Tencent’s acquisition of equity, and whether the two companies will have more cooperation in the follow-up.
The label that Flipkart is often tagged in at home is the “Jindu India versionâ€, which originates from its similar self-built logistics with Jingdong, and it is a heavy asset model. Given that Tencent is currently one of Jingdong’s major shareholders, Flipkart and JD.com’s model is also quite similar. Some industry insiders told reporters that if Tencent’s success, it needs to pay attention to the interaction between JD.com and Flipkart.
“It is still not known whether it is strategic investment or financial investment. Either way, like the investment in Jingdong in that year, it is an investment in new growth opportunities. India represents the next important growth opportunity and the potential of e-commerce. It has also been proven," Yin analyst, an internet analyst, told reporters.
Before this round of financing, Flipkart had just experienced a personnel change: In the competition with Amazon last year, Flipkart was once at a disadvantage. Eventually Flipkart’s investor tiger fund appointed a representative to come to the rescue, and at the end of the year he kept Flipkart in the Indian market. The ranking was followed by the person who was also named CEO of the company.
Despite Flipkart leading the Amazon on GMV, Amazon’s traffic has exceeded Flipkart since 2015. In the long run, Amazon’s threat to Flipkart is self-evident if Amazon wants to increase traffic conversion rates.
Flipkart was founded in 2017 and Amazon entered the Indian market in 2013, playing the role of challenger. Amazon’s determination in the Indian market was huge. As early as Amazon’s first year in the Indian market, Amazon’s CEO Bezos made an additional US$2 billion investment in India. Follow-up Amazon’s commitment to the Indian market increased to US$5 billion. .
Therefore, Flipkart is currently financing to cope with the competition between Amazon and Snapdeal, which spends millions of dollars each month on promotions and discounts. The three websites currently leading the Indian e-commerce market are Flipkart, Amazon, and Snapdeal. In the short term, the trend of “burning money†on the three major e-commerce platforms in India will continue until the winners are identified.
Giants expand soil
The reporter sorted out Tencent’s overseas investments in the past decade and found that Tencent rarely invests in e-commerce companies overseas. Games, social networking, cultural entertainment, and even tool software and hardware have all become Tencent's most concerned investment routes overseas. "You can see that Tencent's current position in the e-commerce space is still mainly in China," Li Chengdong, an e-commerce analyst, told reporters that Tencent had previously invested in an American e-commerce company on a small scale, but the attempt was not successful.
At present, India's IPO technology companies are in the bubble extrusion stage, the performance of the secondary market will also affect the primary market, leading to venture capital market technology company valuation difficult to rise. For overseas buyers like Tencent, even considering financial investment, I am afraid that is also a good choice.
Compared to Tencent, Alibaba.com has a much earlier layout in the area of ​​e-commerce in India. Let’s take a look at Alibaba’s “Indian rhythmâ€: In early March of this year, regulatory documents confirmed that Alibaba’s joint Saifu has invested US$200 million in Indian e-commerce Paytm E-Commerce Pvt Ltd, whose main product is mobile payment tools. But this is not the first time that Alibaba has invested in Paytm. As early as 2015, Alibaba made a share of Paytm and Snapdeal. At that time, Alibaba teamed up with Foxconn and Softbank to invest 500 million U.S. dollars in Snapdeal.
Tencent's shareholding in Flipkart also means that in the current top three of the e-commerce sector in India, two of them are "teamed up" between Ali and Tencent, and their common enemy is Amazon.
In addition to the Indian market, whether it is Tencent or Alibaba, in the past year have been frequently used in the Southeast Asian market. Take Tencent as an example, not long ago it entered the content area by acquiring local portals in Thailand. In addition, Tencent also has layouts in social networking and other areas in Southeast Asia.
Compared with the Chinese market, India and Southeast Asia are an earlier market, and this comparison is based on payment environment, logistics environment and traditional retail industry maturity. But whoever can replicate successfully in India and Southeast Asia is probably a brand new story.
“Everyone knows that the last big cake is in India,†said the founder of a tool product. For giant companies, a very real thing is that as domestic growth slows down, they have to switch to investing overseas.
"Tencent's game business is getting closer and closer to the ceiling, advertising business is also fluctuating, and is subject to a variety of factors, such as user experience. In some ways from a share of the e-commerce field, it becomes a necessary measure to stabilize the future earnings." Yin Sheng told reporters.
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