Shailendra Singh.
Lionel Nbloomberg | Getty Images
Peak XV Partners (formerly Sequoia Capital India and Southeast Asia) says China remains important to investors in the long run, even as other countries benefit from investment outflows from China amid rising tensions with the US It will continue to be a popular market.
“The China Plus One strategy is definitely benefiting places like India and Southeast Asia in terms of procurement and other aspects,” said one of Asia’s largest venture capital firms with $9 billion in assets. said Shailendra Singh, Managing Director of Peak XV Partners. management.
“In the very long term, in terms of 10, 20, 30 years, assuming geopolitics finds some kind of new normal, China will be a huge economy and good businesses will be built in China. ” Singh told CNBC’s Tanvir Gill.
Last year, Sequoia split into three separate geographic divisions. He is Sequoia Capital in the US and Europe, Peak XV Partners in India and Southeast Asia, and HongShan in China. The move comes as U.S.-China relations become increasingly strained.
Peak XV has invested in more than 400 companies in the technology, software, financial services, and consumer sectors. These include fintech company Pine Labs, Singapore-based online retailer Carousell, Indonesian ride-hailing giant Gojek, and Indian edtech companies Byju’s and Unacademy.
China has long been Asia’s technology and innovation powerhouse, home to giant technology companies such as Alibaba Group and Tencent. It also holds the title of factory of the world, producing not only low-cost consumer goods but also most of the world’s iPhones and electric cars.
But companies like Apple and BMW are diversifying their supply chains away from China due to geopolitical concerns. Apple is now reportedly manufacturing about 1 in 7 of its iPhones, or 14%, in India after its operations in India were suspended due to strict coronavirus measures in China. There is.
While India and Southeast Asian countries have benefited from diversification efforts, with companies setting up operations elsewhere, China will remain an important market, Singh said.
“All of us around the world should seriously think about how to get along with China in the long term, although India and Southeast Asia may benefit in the short term,” Singh said. .
David Roche, president and global strategist at Independent Strategy, wrote in March that China’s model is “based on capturing global market share,” while India’s model is “based on developing the domestic market.” India will not replace China in global trade because of its focus on China.
“India will continue to make progress, but it will be slow and steady progress, and it will be nothing like the Chinese model,” Roche said.
