“India will be the next Asian giant”

Laure de Carayon, founder of Asia Loopers, discusses growth and issues related to India. Its consulting firm and annual meeting China Connect has changed its name, diversified its activities and expanded in Asia, to adapt to the new international situation.

China Connect has moved on to expand more widely in Asia, and no longer restrict itself to China. Why this choice ?

Laure de Carayon: This was already the spirit of the 10th edition which could not be held in March 2020, whose theme was “What’s next after China golden decade”. We invited a few more speakers than in previous years, with “Asia Pacific” responsibilities. Despite the preponderance of China, other countries in the Asian zone also have very powerful own internet ecosystems, which coexist with GAFA, and enjoy strong growth. This is the case with India, in particular. Despite this deadly new Covid-19 wave, according to the latest IMF outlook, the country keeps the strongest growth in 2021: it is the second most populous country in the world, with 600 million people under the age of 30 years, the second largest contributor to global GDP growth after China, and it should be until 2025. The digital economy is expected to represent 20% of India’s GDP in 2025 vs. 7-8% today. In addition, the number of Internet users will increase from 700 million (2nd after China) in 2020 to 974 million in 2025 (500 million for mobile Internet users in 2023). To give an idea, e-commerce is predicted to grow by 1200% by 2026. So undoubtedly, India will be the next Asian giant. And Asia Loopers will study it closely, as a pioneer in deciphering complex cultures and ecosystems, essential for business transformation.

Moreover, you are also developing new activities for your firm. Is this a request from brands?

We are adapting to this new perimeter. It is about deploying and structuring the offer. An “Educate” offer: advice, conference, workshop as we did with China Connect, a new “Match-making” offer between project owners and advisers, with a more regional prism, and an “Information” offer to share the consumer and tech news in Asia.

The world market is focused much more towards Asia and in particular India according to you. Did the health crisis play a role in this movement? Did she speed it up?

No, in my opinion the crisis has not played a role – except for having put India in the front page as the leading vaccine manufacturer. Klaus Schwab announced at the opening of the virtual Davos in January, that Asia will represent in 2021, 50% of the world GDP and 50% also of the world population. For months, the International Monetary Fund has placed India in first position in terms of global growth, ahead of China and the United States. If the country, like the whole world, has seen its growth decline at the heart of the crisis, it is resisting. The next billion and a half consumers, with a strong young population – unlike China – represent “the next frontier”. And like everything that is happening for the whole world, once again, the crisis has accelerated the digitalization of the country.

And is that what made you decide to take this step?

Two economic and geopolitical events in the region have accelerated my interest in India. The incidents between China and India in the summer of 2020, which resulted in the cascade banning of hundreds of Chinese applications with high adoption in the Indian market (Tik Tok, WeChat, Alipay, Weibo, Baidu Maps …). It should be noted that the digitization of the Indian economy finds a lot of inspiration in Chinese models. China is funding Indian innovation enormously. The climate, which we see in many parts of the world, including Europe, in favor of increased digital sovereignty is already on the Indian agenda. Finally, and this is important, the signing in autumn 2020 of the largest global regional free trade agreement, RCEP (Regional Comprehensive Economic Partnership), between 15 ASEAN countries (Association of Asian Nations) Southeast), equivalent to about 30% of GDP and affecting 2 billion people. India has chosen not to be part of it and to join the coalition led by the United States and France, while Japan, Korea and Australia have joined the RCEP. This agreement is very important. It draws new balance of power in the region between West and East, between GAFA and national and or regional internet ecosystems in Asia Pacific.

Which sectors do you think are on the rise in India? In which years is everything to be done?

To date, ecommerce, online payments, health and education are among the fastest growing sectors – as in many countries experiencing rapid development of the middle class and its purchasing power, at the same time as the acceleration of the digitalization of the economy. Without forgetting the many public programs such as Skill India, Start-up India, Digital India… and reforms. But we must not forget that as for China, feeding 1.3 billion Indians is a priority: the agritech sector is experiencing a boom (there would be more than a thousand start-ups in 2020), supported by Internet penetration in rural areas, investor interest and the rapid digital transformation due to Covid

What about the administrative conditions to start in India, when you are a brand? Is it more complex or less complex than in China?

To settle in India, you need to create a legal structure. Three possibilities then arise: a liaison office (without commercial activity), a project office (individual or specific) or a Private Limited. The latter is the most recommended, because it allows you to start a commercial activity. India has made a lot of effort. According to the World Bank, the country went from 130th place in 2016 to 63rd in 2020, in the ranking of countries on “Ease of doing Business” for foreign companies. By way of comparison, China is in 31st position and France 32nd.

What would you recommend to a brand that would like to go there?

As with any market, ultimately. It is important to understand the potential of the market, Indian consumers, to take into account the many Indian vernaculars – local, regional – of this federal country. Take the time to test before launching, and not to jump in. You have to know how to be patient and invest in the long term. There are obviously some points of resemblance to China.

The health crisis has revealed questions of a more political nature on globalization (ecology, climate, etc.). And basically, on democracies in general with more engaged consumers (question of Uyghurs …). Do you think that these questions could ultimately be a brake on certain developments in trade between the West and Asia?

The subject goes beyond just democracies and consumers, and also concerns businesses. The global and instantaneous echo that these crises find, added to a more militant and activist youth, with the sounding board of social networks, force companies to be more consistent with their values. But few will give up 1.3 billion Chinese consumers, 280 million Indonesians or even 1.3 billion Indians …
At the same time, it is on the contrary the growing nationalism of the Asian nations – in India, in China, and elsewhere – which presents the great challenge of the West. The example, among others, of the explosion of sales of the manufacturer of shoes and sportswear Li Ning (Anta Group) in immediate reaction – influenced by the State – to the positions of Adidas, Nike or Uniqlo in favor of the Uighurs, translates well the “butterfly effect”, in any case, the momentary consequences of these subjects. With the boycott of spokespersons, the closing of stores, or even the drop in sales of their stores on Tmall by 78%, 59%, and 20% respectively in April 2020 vs 2019. Li Ning was by far the most big beneficiary of the nationalist turn, its sales on Tmall having jumped by more than 800% in April (source: Morningstar). Brands are learning from this crisis. However, as long as this geographical area presents access to a workforce at the best cost, it is unlikely that radical and massive changes will take place, just as this latest crisis attests, in the end …

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