This is crazy! As we all know, online retailers are killing local businesses, in US it might make sense because the profit goes to another sector of economy, Amazon is going to hire more developers and invest in other products that in long run might not be total lose for the whole economy!
what a country like India is going to gain by letting American and Chinese companies destroy her local businesses and take the profit to the mainland!
Not colonization but this is what happens when most Indian businesses won't be willing to burn huge amount of money to get growth initially. That lack of funding environment is a good opportunity for cash rich foreign investors who have an appetite for that kind of growth.
I can only think of one recent IPO in India from tech space which did well, Infibeam[0]. But then again they had a good business model which didn't require burning a lot of money.
It will be very difficult for an Indian startup to burn money to compete with a US competitor. Considering that the US is a much larger market, the reveneues of the US based competitor are simply going to be much higher. For example, Facebook makes $100 per North American user per year. Even if there was an Indian startup starting from India, how would they make similar kind of money? The US is a really large homogeneous market with good enough infrastructure support, that businesses starting from US will always have the revenue advantage over other nations. The only counter point we have seen is the China model, where the Government takes stepes for protecting local companies. Yes, there are some B2B companies outside the US that are doing well, but I can't think of many B2C ones.
Agree with your statement but here I was talking about foreign VCs funding Indian startups because Indian investors don't have the appetite for it.
You won't be able to compete with an already established player from
US if you do a 1:1 same product. You should try to exploit something that works in the local market like what Line did for messaging in Japan or South Korea.
Of course an Indian startup can't compete with Amazon and Walmart! But they can easily ban foreign companies and let it grow organically in the country, they might get it 5 years later but they are not bankrupting all of their local business with no upside for the economy!
If they had to go down this path, they should have done it years ago. I don't know enough about economics to comment whether that have been good or bad though. Before opening up in 90s, Indian economy was closed as well but that didn't necessarily led to Indian enterprises in those spaces being very competitive once they lost all those protections.
Before 90s with all those protections, Indian companies had become sloths. The economy was in bad shape and the govt had no option but to open up for foreign investors/companies.
If anything, foreign investment/companies have brought better days for Indian customers, even though it means more money draining out to US.
Those industries that are still protected(eg. There are no foreign universities) are still in bad shape.
Amazon.in in India is a Marketplace. Unlike US, Amazon does not sell anything directly to consumers. You will see "Full-filled by Amazon". This in fact presents great opportunity to local and far flung businesses who did not had access to market.
The foreign direct investment in retail sector is not all open in India. Also as far as I know, most companies can't move huge amount of money to mainland easily. Double taxation is one thing but there are other problems that forces companies to invest locally.
This is what concerns me the most. If Walmart does to India what it did in US, it will destroy the lives of a lot of people in India. Also, India should try to be self sufficient as much as possible. Instead, we seem to be letting in foreign companies more and more killing any chance of an organic growth environment for Indian companies. Considering that Americans do not want Indian companies to sell their products in US (IT companies), it becomes even more surprising that our government would let such things to happen.
Three way if you consider Walmart.