With the Chinese markets largely out of bounds, courtesy the bitter Sino-American state of affairs, India has emerged as the most sought-after investment haven for U.S. firms. A large group of U.S. companies is increasingly queuing up the subcontinent with a bouquet of investment options, aiming to tap the local talent and gain access to a vast market with strong entrepreneurial and venture capital foundation for a mutually beneficial relationship.
Blue Ocean Strategy
As domestic firms gradually begin to unlock their capital, seeking a fresh start after the coronavirus-induced mayhem, intense competition and commoditization of services tend to limit the chances of benefiting from this trend. With intense price wars and diminishing technological barriers, companies are increasingly devising newer avenues to outsmart rivals as the battle for survival gets murkier.
Instead of viciously fighting against each other to gain market share, companies are aiming to create an ‘uncontested market space’ or rather a blue ocean, which is pristine and pure and devoid of any interference or competition. The strategy is likely to be successful as it would simultaneously attract a large chunk of customers and raise the cost of competition with a first-mover advantage. Whether it’s a new product altogether or an existing product refurbished with some added features or services, the uncontested market space is likely to have better emotional connect, creating a new value curve for customers.
Let us dig a little deep to fathom how U.S. firms are lining up investments in this growing economic powerhouse.
Alphabet Inc. GOOGL: This technology behemoth disclosed plans to invest about $10 billion in India over the next five-seven year period in order to consolidate its position in the digital ecosystem. The company intends to deploy the funds through a mix of equity investments in large firms, startups and strategic partnerships along with infrastructure investments such as data centers.
Alphabet reportedly aims to focus on areas that are related to India’s digitization drive. These include enabling access to information via Internet in local languages and developing new products and services in varied areas like consumer technology, education, health, agriculture and cloud computing. In addition, it aims to help small and medium businesses to adopt digital tools for adapting to the evolving market scenario.
Qualcomm Incorporated QCOM: Qualcomm Ventures, the investment arm of Qualcomm, has inked an agreement with Reliance Jio Platform, a wholly-owned subsidiary of Indian multinational conglomerate Reliance Industries Ltd., to acquire a 0.15% equity stake in the technology firm for $97 million. The strategic deal will help Qualcomm rollout advanced 5G infrastructure and services across the subcontinent, while gaining a foothold in the budding technology enterprise.
The partnership is likely to offer lucrative revenue-generating opportunities for Qualcomm with easy access to Jio Platforms’ more than 380 million user base. In addition, it is likely to offer a huge market to introduce its Snapdragon 690 5G chipset — a 5G chipset for low-cost smartphones for the masses. This, in turn, is likely to usher in more affordable 5G Android mobile handsets, with a plethora of unique features in its category, by the second half of the year.
Facebook, Inc. FB: In April this year, Facebook invested about $5.7 billion to acquire a 10% stake in Jio Platforms. The deal brought together Facebook’s WhatsApp and JioMart, a joint venture between Jio and Reliance Retail (a retail chain in India), to expand the social media giant’s regional presence through superior customer connect program.
Notably, Jio Platforms offers one of the largest bases of first-time Internet users, who are increasingly tapping the digital platform for online shopping and data surfing. Consequently, it provides a lucrative opportunity to grab a significant pie of the growing online population of India. In addition, it is also viewed as a gateway to bypass several regulatory hurdles to navigate the domestic market through strategic collaborations.
Amazon.com, Inc. AMZN: Leveraging its new initiative dubbed Smart Stores, Amazon has significantly strengthened its retail business in India through tie-ups with local stores. The initiative is part of its $1-billion investment in the country for digitizing small and medium businesses. Per the program, customers will first need to scan the QR code using the Amazon app. This code allows customers to explore and select the products available within the store. Once the products are finalized, payment can be made using UPI, credit and debit cards or directly through Amazon Pay balance. The bill is then delivered digitally to the customer, making it a hassle-free process and eliminating risky shop visits.
Notably, Amazon has partnered with more than 10,000 such shops so far across India. Apart from these local shops, many retail chains such as Future Group-owned Big Bazaar, MedPlus and More supermarkets have signed themselves up to the new digital system.
Verizon Communications Inc. VZ: Technological advances have changed the way consumers communicate, resulting in higher home data consumption and video streaming, with digital sustainability being the norm of the day as countless people seek the refuge of the safety of their homes to prevent exposure to the coronavirus. Responding to the ‘new normal’, Verizon has decided to launch a video-conferencing service in the subcontinent by partnering with leading local telecom service provider, Bharti Airtel.
The undisclosed investment will enable BlueJeans, a subsidiary of Verizon, to offer high-quality video-conferencing facilities with enhanced security features like encrypted calls, ability to lock and password protect a meeting, and generate randomized meeting IDs to enable low latency, HD video and Dolby Voice surroundings. It can accommodate up to 50,000 participants on a call and is likely to make major inroads in the digital domain within the country.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Verizon Communications Inc. (VZ) : Free Stock Analysis Report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
Facebook, Inc. (FB) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
To read this article on Zacks.com click here.