More than half of India’s population uses the internet, but many still resist making payments online—only about 300 million people in India.
Last year, CB Insights released a report on the top tech companies (startups) in the world in terms of valuation. The biggest innovative tech companies were from the U.S, followed by China. The U.S and China accounted for about 70% of the 35 selected tech startups.
China’s ‘Bytedance’, with a valuation of $140 billion, was the most valuable company, followed by U.S’ ‘SpaceX’, which valued at an estimated $100 billion. Of 35 decacorns, with valuations over $10 billion, only India’s Byju’s qualified in the list. Having a valuation of $21 billion, Byju’s was the 14th biggest company in all the sectors and the world’s biggest company in the education sector.
This list of tech companies also reflects the position of India in the tech world at a global level. In a country of IT services giants like TCS, Infosys and Wipro, and thousands of startups, we have only one innovative tech company on CB insights’ list of top 35 companies. This raises the moot question, “Why can’t India innovate?”
But let’s talk about China first
In 2021, China had a total of 301 unicorn startups valued at more than $1 billion thereby ranking it second globally, according to a report from a Shanghai-based research centre.
According to the Global Unicorn Index 2021 put together by the Hurun Research Institute, 74 new Chinese unicorn enterprises have been added to the list since last year.
The report showed that there were 1,058 unicorn businesses listed globally, an increase of 80% over the previous year.
Zak Dychtwald, author of ‘Young China: How the Restless Generation Will Change Their Country and the World’, discusses in a Harvard Business Review article the reason behind China’s transformation into one of the most innovative countries in the world.
“We must acknowledge that China now has a resource that no other nation does: a sizable population that has experienced unprecedented levels of change and, as a result, has developed an astonishing propensity for adopting and adapting to innovations at a speed and scale that is unmatched anywhere else on earth. This resource is what is driving the global rise of Chinese companies,” said Dychtwald.
He explained that China’s innovation ecosystem, with its hundreds of millions of hyper-adaptive and hyper-adoptive customers, is what makes the country so competitive in the world today. Innovations must be assessed based on how likely users are to adopt them and China is so far unrivalled in that regard.
Daily usage frequency of mobile payment in China 2022
While China has shown unparalleled growth in technology in the world, India is also home to many unicorns.
According to Google, India is the “next billion users” market, where internet users are jumping to expensive PCs or laptops in favour of inexpensive mobile phones to access the internet for the first time.
Tech-based startup industry in India
There are 107 unicorns in India so far—which have jointly raised over $94 billion in funding and with a valuation of $344 billion.
As of last month, a total of 23 startups were added to the list of unicorns this year alone. India ranks third in the world, after the U.S and China, when it comes to the number of unicorns. From e-commerce to fintech to no-code solutions—these unicorns belong to every sector.
There is no dearth of tech startups in India, much in equivalence to Chinese tech companies in every sector. If China has ‘Tiktok’, India has ‘TakaTak’ or ‘Chingari’ or ‘Moj’. In fintech, India’s biggest payment platform is ‘Paytm’ (similar to Alibaba’s ‘Alipay’). Alibaba is also the investor in Paytm. The list goes on. Experts believe that innovation demands a lot of adaptability and adaptability from users. They also claim that the country’s GDP is the biggest factor behind the lack of innovation in India.
Is GDP stifling innovation?
According to the Internet and Mobile Association of India (IAMAI), there are 692 million active internet users in the country. Of the active internet users, around 346 million Indians are engaged in online transactions including digital payments and e-commerce.
Dychtwald compares these figures with the Chinese market. According to him, more than half of India’s population uses the internet but many still resist making payments online—only about 300 million people, compared with an estimated 903 million in China.
Dychtwald further explains that the problem can be understood from the ‘Lived Change Index’. India’s per capita GDP increased fairly linearly during the past three decades—from just over $350 to more than $2,000—while China’s per capita GDP increased exponentially, from just under $350 to more than $10,000. This discrepancy contributes to the explanation of why many Indians will not scan a QR code compared to the many Chinese who would.
The key point here is not that one culture is innovative than another, but rather that diverse developmental ecosystems naturally produce various attitudes toward change, acceptance, and novelty. The Chinese have had to adapt to rapid change far more than any other population in the world in recent years, and they have discovered that cutting-edge technologies can be essential to their survival.