Shopee, the e-commerce arm of Singaporean technology giant Sea Ltd, has decided to shut operations in India. In the last few months, the businesses of Sea Ltd, a company backed by the China-based Tencent group, has suffered blows in many countries including India and France.
The withdrawal, effective beginning March 29, comes weeks after its e-commerce arm Shopee said it was pulling out of France and after India banned Sea’s popular gaming app “Free Fire”. The company has posted losses in the last few quarters and is under pressure to consolidate its business.
“Due to a drastic shift in the market sentiment towards growth stocks, all these e-commerce companies are under real pressure to at least break even as soon as possible,” said LightStream Research equity analyst Oshadhi Kumarasiri, who publishes on the Smartkarma platform.
In India, trade bodies like the Confederation of All India Traders (CAIT) were opposing the entry of Shopee operations as they see it as another counterpart of Amazon which will eat into their businesses.
CAIT launched strong opposition against Shopee in September last year and took the matter to the Ministry of Finance and Ministry of Commerce. CAIT had alleged that Shopee’s parent company, SEA Holdings, had violated the foreign direct investment (FDI) policy in India.
Praveen Khandelwal, general secretary of CAIT said, “Any company which will violate the sovereign law of the country and breaches data collected from India shall meet the same fate. There are a number of other foreign-funded companies who are habitually playing with Indian laws and involved in mal-practices. Either they should mend their ways else must pack their bags to exit from India.”
Previously, in some rather unusual remarks, Singapore Prime Minister Lee Hsien Loong said that almost half of Lok Sabha MPs in India have criminal charges pending against them.
In his 40-minute speech, Lee said, “Things start off with passionate intensity. The leaders, who fought for and won independence, are often exceptional individuals of great courage, immense culture, and outstanding ability. They came through the crucible of fire and emerged as leaders of men and nations. They are the David Ben-Gurions, the Jawaharlal Nehrus, and we have our own too.”
The Singaporean PM added, “Nehru’s India has become one where, according to media reports, almost half the MPs in the Lok Sabha have criminal charges pending against them, including charges of rape and murder. Though it is also said that many of these allegations are politically motivated.”
Prior to that, India had banned 54 Chinese apps, amidst deteriorating Sino-India ties. The ban was announced due to security concerns and one of the banned apps was ‘Free Fire’. It is a Singaporean app with significant Chinese investments. For India however, even a trace of Chinese presence is a big turn off. So, this app came in the middle of the crossfire between India and China.
And when a huge internet market like India bans an app, the consequences are generally severe. The ‘Free Fire’ ban too has led to the Sea Group losing $16 billion immediately.
The relations between India and China have deteriorated in the last few years. Singapore, a Chinese majority country, is caught in this fight, and its policies are tilting towards China because the majority population of the country is of Chinese origin. The economies of China and Singapore are closely linked as there is cross-shareholding in many companies.
Now Singapore is slowly losing the Indian market because India cannot allow any company with close links to China to collect data about its people through e-commerce or fintech operations. Singapore must learn to adapt to Indian policies and only the ‘clean’ companies – ones with no direct link to China – should enter the Indian market.
