The growing influence of Chinese companies through investments in India’s entertainment sector

Ever since the tensions between India and China began at the Line of Actual Control (LAC) in Ladakh, the Indian Government has been proactive in taking stern action against Chinese businesses operating in India. This ultimately led to the ban of numerous Chinese apps in India.

However, Chinese roots run deep in India and there are numerous sectors in which Chinese firms have made significant investment in order to increase the influence of its government. Investments have been made in sectors such as entertainment and news aggregator apps.

News and eBook app DailyHunt secured a $25 million funding in 2016 led by ByteDance, the same company that owns TikTok, which has been banned in India. With the investment, Bytedance founder & CEO Zhang Yiming joined the Board of Daily Hunt. In 2016, the news aggregator app had a user base of over 120 million app downloads and 28 million monthly active users reading approximately 4.5 billion pages.

Similarly, NewsDog, another news aggregator app, announced a $50 million Series C round in 2018 led by Chinese internet giant Tencent. It claimed to have over 50 million users. It provided its services in as many as 10 Indian languages.

Xiaomi, a Chinese smartphone company, led a $25-million investment into Hungama Digital Media Entertainment. When the investment was made in 2016, Hungama boasted over 65 million monthly consumers across its music, video and movies platforms. At the time, it had partnerships with over 700 content creators and offered over 8,000 movies in several Indian languages on its platform.

Gaana, a music streaming service, the largest in India, was the beneficiary of investment to the tune of $115 million led by Tencent. “With data prices so low, having easy access to crores of songs which are editorially curated and personally recommended is a better experience than piracy, where quality is unpredictable and selection is limited”, Prashan Agarwal, CEO, Gaana had said.

“As more affordable mobile data plans are driving smartphone penetration in India, we believe growth in the music streaming market will accelerate. By investing in and collaborating with Gaana, we look forward to bringing more innovation and better experiences to all Indian music lovers,” said Tencent President Martin Lau.

Tencent has made investment in another entertainment platform, MX Player, that offers playback as well as streaming services. India is MX Player’s largest market, with 175 million monthly users until October 2019.

In March, it was reported that Chinese gaming giant Beijin Kunlun had agreed to sell its hugely popular gay dating app Grindr after the US administration deemed it to be a national security threat. Committee on Foreign Investment in the United States (CFIUS) told the Chinese company that its ownership of the site constituted a national security threat.

CFIUS expressed concern that the personal data of its close to 27 million users could be misused by the Chinese regime. It has been reported in the past that engineers in Beijing could access the personal data of Grindr users, including their private texts and HIV status. It is easy to see how such data could then be used to blackmail people.

It is widely recognised that Chinese companies often work as extended arms of the Chinese government. There are grave privacy issues associated with Chinese apps, which prompted the Indian government to ban numerous such apps. Even so, there are numerous apps with Chinese investments that often have users running into tens of millions. It is very possible that the data of all such users are at risk, which then has the potential to poser a grave threat to Indian national security.

The Indian Government has also taken steps to check Chinese influence in the Indian economy in recent times. However, there is still a lot that remains to be done and a concerted approach needs to be launched in order to curb the growing influence of Chinese firms in India.