The decision to ban PUBG, one of the most popular mobile games in India, may not go down well for future Chinese investors, especially those looking at start-ups and other technology companies in the country.
It is a known fact that 18 out of the 30 unicorns in India have Chinese investments and that this funding has helped them in their journey. At the same time, most of these investments were at the later stages and not during ideation or development. PUBG: Mobile, which is owned by the Chinese firm Tencent, had earlier been banned by many states in India due to its addictive nature.
The current ban has been mainly due to the strained relations between the two countries.
According to Sensor Tower data, a platform that provides market intelligence and analytics for mobile apps, PUBG had received 24 per cent or 175 million, out of the total 734 million downloads it has globally, from India. This number includes the downloads of PUBG: Mobile and the Chinese version of the game titled 'Game For Peace'.
“This is the third round of 'digital strikes'—banning of Chinese apps by India. It is an asymmetric tactic that is being used to exert economic pressure on China. It is also a bellwether move that is being replicated by other countries. However, the marginal utility or effectiveness of this tactic is reducing since there are hardly any more popular Chinese apps that are left for India to ban so India needs to find other ways to exert economic pressure and this is a tough question. There is also a fear that China might start retaliating with economic measures that might hurt Indian industry,” observed Santosh Pai, Honorary Fellow at the Institute of Chinese Studies.
Though the app had been the most popular among Indian gamers, they may find other ways to overcome this ban. For instance, when the mobile version of the app was banned by many states in India due to its severe addictive nature, youngsters shifted to the PC version of the app and the addiction continued. Experts pointed out that the differences between the two versions were in terms of graphics and game-designing, and that made the PC version of the game popular.
One of the main reasons was that while the mobile version of PUBG ran on low-end graphics, typically designed considering the specification of standard smartphones around the world, PUBG for PC can be quite demanding, and utilises high-end graphics to give a comforting touch to the gaming experience.
“The social cohesion of PUBG has proven to be entrenched in specific demographic profiles in India. Given the network effects the ban on PUBG, will be a definite social loss for young gamers in India. That being said, the Android ecosystem is very open and ingenious— gamers can technically find ways to circumvent the ban,” points out Alok Shende of Ascentius Consulting.
Many experts feel that the overall sentiments may not be very greatly hurt in case there is a lull in Chinese investments and many Indian technology platforms may attract more investments in the future.
“Jio as a tech platform possibly attracted more capital into India than what most of the Chinese investments were over the last two years. Given the consumption advantage, spread and its size India will be an attractive destination and the decision of the government was backed by this rationale. On the contrary, this would trigger a bad precedent for Chinese corporations with a cascading impact in other countries too. China, am sure, will address this and not let its rolling economic advantages slip for emotional gains. Gaming is spreading in several other areas as a useful technique to be adopted and is not limited to just fun,” says Subramanyam Sreenivasaiah, CEO at Ascent HR.
The Confederation of All India Traders (CAIT) said that they had in a letter sent to the Union Commerce Minister Piyush Goyal and Union IT Minister Ravi Shankar Prasad on 24th August 2020 had urged them to ban more Chinese Apps.
“Banning more Chinese Apps other than 59 already banned Chinese apps was necessary as these apps were a threat to the country’s safety, security and sovereignty. The ban was also required for the protection of individual data these apps were accruing through their usages,” said Praveen Khandelwal, the Secretary-General of CAIT.
As per reports Tencent has exposure to different Indian companies including Byju’s, Hike and Swiggy and Udaan and has stakes in the Ibibo Group, KhataBook, MyGate, NewsDog and Practo. It may not be very easy for the Indian government to ban many Indian start-ups where the Chinese have stakes.
“Current developments are certainly not very favourable for business for parties from both countries. This reinforces the fact that businesses need to work hard in the areas of policy advocacy and stay invested for the long term,” Aditya Narayan Mishra, director and CEO of CIEL HR Services, told THE WEEK.