The China-India tech war

Shopee pulling out of India is the latest in a long list of China-backed apps and services being banned or rejected from India.

The Singapore-based eCommerce company Sea Ltd just closed its Shopee operator in India after merely 6 months of operations in that country. While some news outlets link this decision to India’s ban of the battle royale game Free Fire, the direct connection between the two events is hard to establish.

The more probable explanation is that India is in a serial ban of all businesses that have Chinese ties. For example, the Free Fire ban was not isolated and 50 other China-back mobile apps had also been banned. The ban of Free Fire was announced but was not enforced, the game still being accessible in India after the ban was pronounced.

By the way, the link between Free Fire and Sea is Garena, the digital entertainment subsidiary of Sea. Garena also developed Duke of Mount Deer, League of Legends, Thunder Strike, Rising Force Online, … In 2014, with a $1 billion revenue, Garena was tagged the largest internet company in Singapore. After the Ontario Teachers Pension Plan made a major investment in Garena in 2015, the company changed its name to Sea in 2017, and the name Garena was retained for the games division of the larger structure. Tencent became the majoriy stakeholder of the company.

So why did Shopee pulled out of India? The claim that eCommerce is going through a rough patch also does not hold, as the pandemic situation has essentially led to a surge of online purchases and delivery services. Shopee tags itself as the largest eCommerce platform in Southeast Asia with 343 million unique visitors, so it is hard to conceive that a player with such deep pockets could get short of breath when entering such a big market (India).

It is more likely that Shopee, even though not backed by Tencent anymore, still transits all of its data through Chinese servers (thus the Tencent investment). According to Reuters and its sources:

Such collection would allow the data to be mined, collated, analysed and profiled, potentially by elements hostile to the sovereignty and integrity of India and for activities detrimental to national security.

Sea Ltd denied such a data-management model, but Tencent remained silent on that matter.

When the Free Fire ban happened back in February 2022, Indian traders were already calling for a ban on Shopee. Was that a move to kill Sea’s market cap, which took a toll following the Free Fire ban by losing $16 billion in value? According to China’s news outlets, India repressive bans on Chinese technology is merely a move to make room for its own homegrown apps, and a prevention measure to make sure India doesn’t turn into China’s regional playground.

Back in 2020, India had already banned +200 Chinese apps from its national market, claiming those apps were a threat to the country’s national security. Snack Video, AliExpress, Taobao Live, Lalamove, Playerunknown’s Battlegrounds, and a bunch of dating sites. Since August 2021, Shopee started to quietly launch in India, a strange approach considering that such a business would rather need a strong buzz for rapid adoption and full-market reach to become competitive.

2020 was also the year India officially took sides with Trump’s USA in its economic war against China, so Shopee’s attempt to deploy in India may have just been an irreverent move on the part of China to sockpuppet its way back into China, to no avail.