Exclusive | Chinese e-commerce start-up Club Factory, once a challenger to Amazon and Flipkart in India, lives to fight another day
- After only three years in the India market, Club Factory became a major player with 100 million monthly active users and about 40,000 local sellers
- After the Chinese app ban, 90 per cent of the local employees were asked to take leave without pay but subsequently 80 locals quit their jobs
When Aaron Li Jialun woke on the morning of June 29, he had no inkling that his dream of building India’s No 1 e-commerce platform by year’s end was about to become a nightmare.
Listening to media reports, he was shocked to hear that the Indian government had just banned 59 Chinese apps, including his own Club Factory site – which he touted as “Taobao without borders”, a reference to the highly successful Chinese e-commerce site run by Alibaba Group.
“I was really surprised,” Li said. “The Indian government should have given us official notice. It’s just not right that we found out about the policy from media outlets. We had no clue at all.”
In ordering the ban, which included viral short video platform TikTok and China’s ubiquitous messaging app WeChat, the Indian government cited “sovereignty and security” threats. Another 118 Chinese apps were blocked early September as tensions with China continued to simmer.
The bans came amid rising anti-China sentiment in India after 20 Indian soldiers were killed in a deadly confrontation with Chinese troops in a disputed Himalayan border region in June.
“It was less a message to Chinese tech companies. It’s really more of a message to the Chinese government,” said Pratyush Rao, head of the Indian political and regulatory risk practice at consultancy Control Risks. “There’s very little that Chinese companies can actually do. They will either have to wait it out or, as we’ve seen with some companies, suspend their [India] operations for the next six months.”