Flipkart and Tencent became household names several years ago in two of the world’s fastest growing economies, India and China. But more recently, their staggering growth rates and innovation in the mobile sphere have forced the rest of the world to sit up and pay attention. Some say that their strength in the market is a direct offshoot of their robust parentage – which, similarly, has only become widespread knowledge since the two firms’ growth began gaining a global audience. The South Africa-based media and tech juggernaut, Naspers, is a major shareholder in Flipkart – India’s Amazon – and Tencent, which owns China’s gamified Whatsapp-Facebook hybrid, WeChat. Naspers, which is one of the largest companies listed on the Johannesburg Stock Exchange, recently began garnering plenty of attention of its own when the value of its stocks reached a record high earlier this month, taking its market capitalisation to R709.7 billion ($60.4 billion).
Naspers set out on what, in hindsight, looks a bit like an emerging market acquisition spree in 2001, starting with Tencent, now the world’s fifth largest internet company, and Naspers’ biggest success story to date. But South Africa’s longstanding media company didn’t hit the ground running in China.
The company began sussing out the future economic power in the early eighties, when a team of intrepid Naspers employees were first sent to China. They dabbled in a few ventures, among them a search portal and Internet Service Provider called Maibowang, on which they partnered with AOL.
“We created the second biggest ISP in Beijing in 1998 and we lost the battle there,” said the company’s visionary founder Koos Bekker who, after a year’s sabbatical, re-joined the board as non-executive chair earlier this month. “We eventually lost US$80-million and had to fire people and close it down because of mistakes we made. That was an expensive failure. We’ve failed quite a lot but if you’re going to fail, get into the market quickly, fail quickly and learn from it.” They’ve learned a thing or two since then, and while “failing quickly” is their philosophy of sorts, there’s been far more success than failure in recent years.
Flipkart, India’s largest e-commerce company – which Naspers acquired a 10% stake in back in August 2012 – has gone from strength to strength, with the firm’s mobile traffic increasing tenfold in fewer than 18 months. Flipkart has decided to ride that wave of optimism, and plans to shut down its website within a year and transition completely to a mobile app, the firm recently announced.
India’s smartphone users are rapidly growing in number, making it the third largest Internet market after China and the US. The Boston Consulting Group has projected that the South Asian nation will have more than 550 million Internet users by 2018, close to 80% of which will access the Internet via mobile devices. Naspers invested a further R2.67 billion (approximately $242.3 million) in August 2014, in a round which totalled $1 billion of investment, taking its stake to 16.6%.
More recently, Tencent had the world waiting with baited breath as it released its first quarter financial results last month, which put its value at more than R2 trillion ($165 billion). That takes Naspers’ 34% stake to R680 billion ($56 billion) – or a staggering 95 percent of its market capitalization.
While Tencent has e-commerce giant Alibaba to compete with (albeit indirectly, for the most part), Flipkart’s direct competitor, Snapdeal, is taking a more aggressive approach to dominating India’s $3 billion e-commerce industry. India’s popular online shopping store is aiming to make up to ten more investments this fiscal year. No doubt Naspers will be watching the two countries’ respective battles for dominance in the mobile arena, ready to make its next move.
Featured image by Johan Larsson via Flickr
This post was originally published on The Future’s Muse.