Alibaba’s Investment In India Is Over $3 Billion. So, Why Ban It?

Half-hearted approach of banning a few Chinese apps every few weeks is ineffectual with regard to national security.

Image used for representational purposes.

(Photo: Kamran Akhter / The Quint)

I have a friend who is an amateur tech-geek. So, about a decade ago, when most of us hadn’t even heard of LED bulbs, he had installed LED lights in his new apartment. This made him an illuminance-snob. He would look down upon us desis who were still trapped in our incandescent world. The trouble was, that a couple of years down the line, when the first bulb went bust, he couldn’t find a replacement in India.

Many of us, who were on the receiving end of his tech-superciliousness, were secretly happy. It looked like that we filament-types were going to have the last laugh.

But my friend found a jugaad. He ordered the special 14 mm screw-in LED bulbs – they are called E-one- four, he would say – on the then relatively unknown Chinese e-commerce site, Alibaba Express. It took about a month to arrive, but it helped him regain his lost prestige. That was the first time I had heard that Alibaba delivered to India as well.

What Led To Alibaba’s Popularity In India?

Over the years, Alibaba’s apps have become much more popular in our country. It is mostly used by small entrepreneurs, who buy Chinese-made things in bulk on AliExpress, and sell them to Indian customers.

In fact, recently a petty-politican-cum-petit-bourgeois from the ruling party was trolled on social media for allegedly buying Chinese-made trinkets on Alibaba and reselling them online.

Alibaba is also used by ‘dropshippers’ or small e-commerce sites which connect customers with manufacturers. The site neither holds any inventory, nor delivers the goods. Instead they simply transfer the order to the manufacturer who delivers the products directly to the customer.

AliExpress allows such ‘dropshipping’ intermediaries to take orders on their behalf, even markup prices, and then delivers them directly.

10 years ago, all this was unknown. But even then, my one-foot in business journalism had exposed me to the phenomenon called Jack Ma. I knew how the former English teacher had captured China’s e-commerce market. I also knew that Yahoo’s investment in Alibaba was the only smart thing it had done in the past 15 years. It was much later that I learnt that Ma was not only an e-commerce guru, but also a startup-investor with a nose for potential unicorns.

Why Banning Alibaba On Pretext Of ‘National Security’ Is Pure Humbug

Today Alibaba has a massive presence in India’s startup space. It has invested a total of about USD 3.6 billion in Indian companies. Alibaba affiliate Ant Financial owns almost one-third of India’s most successful payments app PayTM. Alibaba also has investments in Zomato, Snapdeal and BigBasket. All of these companies have become more valuable since Ma put his money in them. But their value is derived from the number of customers they have, not the profits they make.

In fact, everyone who runs a startup knows that the valuation game is about customer data.

The more granular the data – what exactly does the customer eat, wear, spend and buy – the more valuable is each unit of the data that a startup has acquired over its lifetime.

Alibaba’s investments in Indian startups is, to a large extent, based on these ‘data’ acquisition calculations. So, to ban AliExpress or Alibaba on the pretext that they are collecting data about Indians, which could affect our national security, is pure humbug.

Two years ago, BJP MP Narendra Jadhav had raised national security concerns over Alibaba’s stake in PayTM. The company responded the very next day, saying that it does “not share user data with our investors or any foreign entity.” But questions emerged again this August, when Alibaba’s investment arm said it had ‘significant influence’ over PayTM. Although this is just an accounting term used for companies where the investor has a board membership, it immediately raised eyebrows amongst those who have been watching Chinese investments in India.

Is India Serious About Chinese Access To Indian Data? If Yes, Here’s What We Must Do

India has every right to be concerned about Chinese presence in the sensitive area of user data. The experience of Cambridge Analytica and other manufacturers of opinion, tells us how crucial personal data can become in influencing political and cultural outcomes.

To let big Chinese companies get access to these massive databases about Indian citizens is a problem that had to be addressed sooner than later. The question is whether it is being done as a planned strategic response to the Chinese threat, or these are short-term tactical jabs that are just for show.

If India is serious about barring China’s access to India’s data, it has to ask Chinese investors to exit all Indian data-driven companies as well. It has to ask Alibaba to dismantle the entire network of SMEs that it has created, because there is no reason to believe that Business-to-Business data cannot be used to destabilise our economy.

‘Surgical Digital Strikes’ On China Only Show Govt As Being Strong-Willed

When China attacked India’s borders earlier this year, many in the rightwing firmament wanted Chinese goods and companies to be banned. The net result is that Chinese phone companies have had their best quarter in India, and they’ve increased their share of the smartphone market. It is not inconceivable that these phones come embedded with the ability to spy on Indian users. It is a much simpler way to collect billions of units of user data than AliExpress or some Chinese dating app.

This half-hearted, piecemeal approach of banning a few Chinese apps every few weeks is entirely ineffectual, when it comes to national security.

Of course, it does its political job of showing the government to be strong-willed and decisive, especially when these periodic bans are paraded on the pliant part of India’s national media as ‘surgical digital strikes’ on China.

(The author was Senior Managing Editor, NDTV India & NDTV Profit. He now runs the independent YouTube channel ‘Desi Democracy’. He tweets @AunindyoC. This is an opinion piece. The views expressed above are the author’s own. The Quint neither endorses nor is responsible for them.)