A vendor wearing a face mask sells clothes at a market in Srinagar, the summer capital of Indian-controlled Kashmir, Nov. 26, 2020. India's COVID-19 tally reached 9,266,705 on Thursday. (Xinhua/Javed Dar)

More Chinese venture capital (VC) firms and technology companies are shifting focus from the once-valuable Indian market, where uncertainty is rising, to emerging markets in Southeast Asia.

India has been sending a protectionist message to the outside world, especially targeting Chinese investment, since the first half of the year by such moves as a revised foreign direct investment (FDI) policy and several rounds of bans on Chinese mobile apps.

Li Jian, founder and CEO of Draphant, a Chinese consulting firm focused on Indian investment services, told the Global Times on Monday that previously, Chinese VC investors had an equal attachment to both India and Indonesia - the largest market in Southeast Asia - when they were going global. 

"But now those investors cannot truly invest in India because of policy curbs, so they're leaning more toward Southeast Asian markets like Indonesia," said Li.

India's FDI policy was amended in April, making government approval mandatory for FDI from border countries, a policy that was widely seen as a crackdown on Chinese investment. The move sent many Indian internet start-ups, which have relied on Chinese investment in recent years, into disarray.

Shunwei Capital, the VC firm established by Lei Jun, CEO, and chairman of China's technology giant Xiaomi, told the Global Times on Monday that the firm is not paying attention to projects in India at the moment.

Shunwei Capital and Xiaomi have backed ShareChat, an Indian social media platform that has seen surging downloads during the epidemic. In January 2018, Xiaomi led the B round of financing for ShareChat, and Shunwei Capital also invested. Eight months later, Shunwei once again led a new round of investment in the Indian app.

Richard Ma, an internet industry practitioner who returned from working in India last year, told the Global Times on Monday that after the Indian government moved to crack down on Chinese investors, there has been an evident shift of focus.

"Many companies are increasingly looking at Indonesia and Vietnam - also traditional hot destinations for Chinese investors - and shifting resources previously given to the Indian market," said Ma. 

"One subsidiary of our company shifted an internet finance project from India to Vietnam in recent months, after the Indian government moved to tighten payments related to Chinese companies," Ma noted.

Given the obstacles in India, more Chinese firms have a growing interest in investing in Southeast Asia and believe in the opportunities ahead, Li said, adding that countries in the region have performed well in battling the COVID-19 pandemic, injecting confidence in a business recovery.

According to a report on Indonesia's digital economy by Google, Temasek and Bain & Co, first-half investments in the country's tech sector totaled $2.8 billion, up 55 percent year-on-year, the Financial Times reported.

From January to September this year, China's investment in Indonesia increased 79 percent year-on-year, remaining Indonesia's second-largest source of investment, data from Chinese Ambassador to Indonesia Xiao Qian showed in early November. The digital economy, artificial intelligence and smart cities are among the emerging areas where China and Indonesia can strengthen cooperation, according to Xiao.
Newspaper headline: SE Asia attracts Chinese VCs as India wanes