China's repressive policies 'dam industry' - 'investors burn'

- Startup leaders and investors like Jack Ma who criticize government policies have to pay a heavy price

- Indian startups should start efforts to attract foreign investors unhappy with China's tough policies

Sun Dao, a Chinese businessman and chairman of the Dao Group, has been sentenced to 15 years in prison by the Chinese government. He has been sentenced to such a long prison term for criticizing the Chinese government. Not only Sun Dao, but also Jack Ma, founder of the Alibaba Group, one of the world's largest e-commerce companies, has been the victim of China's repressive policies, condemning the Chinese government's harsh and authoritarian policies. The victims of China's repressive policies are now businessmen and corporate houses. The Chinese government is believed to be behind the sudden disappearance of Jack Ma in January.

China red tape against startups companies

It has become clear that the Chinese government is suspicious of technology and tech giants. Recent crackdowns - the overnight demise of the online education sector, the crackdown on food delivery apps, real estate and other companies - are having a global impact. Earlier this week, the Chinese government banned online education firms from teaching courses in schools and raising funds from abroad and directed them to register as non-profit firms. The move eroded nearly 50 per cent of the એડ 1 billion market cap on China's listed Adtech, while private startups also became a loss-making business overnight. For example, the market capitalization of tuition firm Richo Vibriga dropped significantly from 3 billion to ૮૮ 50 million, and its investors were in tears.

The following day, the Chinese government said food delivery applications would require its workers to pay more than the minimum wage, provide insurance and relax delivery times during peak order hours. This led to a drop in shares of food delivery applications and increased pressure to treat workers well.

The ride-hailing app Didi was removed from the App Store due to a cyber security review following its 2.5 billion public listing. Similarly, Ant Financial's IPO was canceled and Chinese billionaire and businessman Jack-man was summoned on an individual basis. Most recently, in July, six Chinese stocks were among the top-10 listed companies in the world, which have suffered the brunt of China's repressive policies and huge losses to investors.

China's move to curb technology is currently unacceptable. Amid continuing tensions with the US, China is defending its mobile-network and handset maker Huawei. Its semiconductor industry and artificial intelligence efforts are still in full swing. These issues seem to be shifting to the consumer technology side, as China's policies can focus not only on the consumer app but also on industry-focused technology. At a time when technology has become so important, "we must recognize the fundamental importance of the real economy ... and never de-industrialize," said Chinese President Xi Jinping in 2020.

What will be the impact on India?

It would be hasty to say for sure, but there are already indications of this. Global investors - stock market investors, venture capitalists and private equity funds may come to India instead of China as India is currently a more open and potential market (even for higher growth than China, which already has a mature economy). Experts in startup industries say that amidst China's repressive policies, leaders of Indian startups need to seize these opportunities. Due to China's strict policies, foreign investors will be reluctant to invest in Chinese startups or digital ventures, while liberal policies may make them more willing to invest in Indian startups. Indian startups investors and entrepreneurs are looking to China to emulate their model, growth and sales strategy as well as the funding mechanism. Many investors who took part in China's growth in the 2000s are looking for opportunities in Indian market investment and growth. Because the government's repressive actions and policies are a major concern for many investors seeking to invest in China.

According to The State of Indian Startups Ecosystem Report - 2021, there are currently about 4,619 active startups in India, including both funded and boosttrapped startups and 6 active investors investing in this new-age venture. In the wake of liberal policies, startups in India are now launching IPOs and being listed on stock exchanges. Given the current circumstances, India also needs to formulate more clear and concrete policies for startups and the techno-lead sector to avoid friction between the online and offline markets and to prevent the monopoly rule and flight of foreign investors in contingency circumstances.