Alibaba Envy in India

Posted by: Bruce Einhorn on October 31, 2007

With Alibaba’s $1.5 billion IPO – the biggest ever for a Chinese Internet company - scheduled to start trading in Hong Kong next week, some people in India are feeling understandably envious. Writing in the Economic Times, Ajay Jindal says that “the contrast between China’s Internet sector and India’s Internet sector couldn’t be more striking.” Jindal points out that “China has at least eight listed Internet companies (we may have missed some) with a market cap of over $1 billion. India has none. In fact, India hardly has any listed net companies.”

One problem, of course, is infrastructure. I’ve written about this before on this blog: The Chinese government is obsessed with building roads and ports and bridges and airports and railroads, while India’s leaders move far more slowly. The same rule applies for telecom and Internet connections: Typically, the Chinese are very good at building broadband networks across the country. The Indians, not so much.

There is some reason for optimism, though. As my colleague Nandini Lakshman writes in this BW story, millions of Indians are making an end run around the country’s poor fixed-line networks by using their cell phones to go online. “The number of Indian consumers connecting to the Internet via cell phones more than doubled, to 38 million from 16 million just last year,” she writes.

Jindal is a bit hopeful, too. The hugely popular Chinese Internet stocks – companies such as Baidu and Tencent – needed several years to gain users before they hit the big time with investors, and since India’s development is a few years behind that of China, maybe it’s just a matter of time before India has its own big Net IPOs.

Certainly there’s no shortage of VC money heading to India to support Internet start ups. Maybe India will produce some Alibaba’s or Baidu’s of its own someday. For now, though, this a party to which the Indians aren’t invited.

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