According to Peak XV Partners, formerly Sequoia Capital India and Southeast Asia, China will continue to be a significant market for investors in the long run, even as other nations profit from capital streaming out of China despite growing tensions with the United States.
“The China Plus One strategy, in terms of sourcing and so on, is definitely benefiting places like India, Southeast Asia,” said Shailendra Singh, managing director of Peak XV Partners, one of Asia’s largest venture capital firms with $9 billion in assets under management.
“In the very long term, if you take a 10, 20, 30-year view, if you assume that geopolitics will find some new normal, China is going to be a huge economy, and good businesses will be built in China,” Singh stated to CNBC’s Tanvir Gill.
Last year, Sequoia was divided into three separate geographic units: Sequoia Capital in the United States and Europe, Peak XV Partners in India and Southeast Asia, and HongShan in China. The action comes amid growing tensions between Washington and Beijing.
Peak XV has invested in over 400 firms in the technology, software, financial services, and consumer sectors. These companies include finance firm Pine Labs, Singapore-based online retailer Carousell, Indonesian ride-hailing behemoth Gojek, and Indian edtechs Byju’s and Unacademy.
China has always been a leader in technology and innovation, with companies such as Alibaba Group and Tencent. It has also earned the label of the world’s factory, producing low-cost consumer items such as the majority of the world’s iPhones and EVs.
Despite geopolitical concerns, companies like Apple and BMW are expanding their supply networks beyond China. Apple now reportedly manufactures approximately one in every seven iPhones, or 14%, in India, following the disruption of its operations in China due to strict Covid rules.
While India and Southeast Asian countries have benefited from such diversification initiatives as corporations establish operations elsewhere, Singh believes China will remain an important market.
“All of us around the world, while India or Southeast Asia might benefit in the short term, should really be thinking about how would we work well with China in the long term,” Singh stated.
In March, David Roche, president and global strategist at Independent Strategy, stated that India will not replace China in global commerce since the Chinese model was “based on achieving global market share” and the Indian model is “about domestic market development.”
“India will continue to make progress but it will a slow and steady progress, and not at all similar to the Chinese model,” Roche stated.
