Chinese Internet companies need to localize services and gain locals' trust to succeed in India, and mobile apps should form cornerstone of their strategies.
Localization and gaining trust among users will help Chinese Internet companies to gain a bigger foothold in the competitive India market, say market observers, who add that having a mobile strategy would work in their favor.
Priyanka Khandelwal, research analyst at 6wresearch, said India presents an "immense" opportunity for most foreign companies looking to enter the market due to the large size of its Internet population, as well as the relatively low broadband penetration and adoption of payment services.
It is also an open market where users are open to exploring new features and services as long as they benefit in one way or another, Khandelwal said, adding the Internet is gaining popularity among urban youths and those in the rural areas of the country.
So for Chinese companies such as Tencent looking to grow its presence and be a success in India, he reckons that so long as their services are differentiated and innovative, they stand a chance to attract a good sized user base.
"In the current scenario with the [growing] number of online companies fighting to gain maximum wallet share of India's Internet user, we believe localization and customization is key to gain maximum share," the analyst said, adding this is not restricted to merely language translation.
Keeping costs low for their services will also be a factor in the price-sensitive nation, Khandelwal pointed out.
Rahul Verma, the India executive director of Ipsos MediaCT & Public Affairs, also noted that gaining the trust of Indian users will be crucial for Chinese Internet companies.
Ten years ago, Indian consumers were open to buying Chinese products only if they were marketed by the Western companies, Verma said. "There was a sense of trust which Indians had on the Western world producers [whereas] China-made products and brands were not trustworthy then," he explained.
The overall mindset is shifting though, as consumers' trust Chinese in services and products are growing, he said.
Kunal Biswas, co-founder of market research firm The Banyan Tree, does not think a company's place of origin should dictate the success or failure of a product, though.
"If the product is good and the marketing strategy of the product is good, it should succeed in India," Biswas said.
Go mobile, social
However, Khandelwal said there are areas of businesses that Chinese Internet companies should avoid competing in due to strong advantages to local companies. These include online travel, jobs, and classified advertisements, he added.
This is because such businesses often require committed offline resources in terms of product development, marketing, and feet-on-street sales force--areas that local players have traditionally done well in compared to incoming foreign ones.
Instead, Chinese companies should focus on creating mobile apps to leverage the growing mobile Internet penetration rate in India, he suggested. These apps could be based on Facebook's platform, which has a huge member base, the analyst added.
"Facebook has a huge member base in India and apps related to it would have a better chance of success. [Similarly,] mobile penetration in India is much higher than Internet penetration. With the introduction of 3G in India, mobile apps have great potential [of succeeding]," Khandelwal stated.