Jio Platforms – The vacuum.

Jio has a window to fill the void left by China.

• The banning of Chinese apps in India has created a convenient vacuum for which there is a great opportunity for Jio Platforms to fill.
• The Indian government is serious about blocking Chinese apps and has moved to block another 47 apps that were little more than mirrors that were attempting to get around the blockade.
• This means that my original view that the blockade was created as a bargaining chip (see here) was too dovish and that in fact, India means business.
• This move to block any workarounds is a sure sign of that and this creates a great opportunity for the local players to finally get in on their home market.
• Back in 2014, companies like Micromax (see here) tried to create their own suite of Digital Life services in order to capture the sudden wave of first time Internet users on cheap Android phones.
• Unfortunately, they did not execute well at all, leaving the door open for Google and Facebook to spread their own ecosystems widely through the Indian market.
• Today, this battle is largely over with Google and Facebook controlling most of the Digital Life services that users enjoy on their devices.
• However, behind this, there is another opportunity which the Chinese refer to as O2O or offline to online services.
• These are offline services that move online and include things like commerce, health, agriculture, education, transport and so on.
• The example of Tencent and Alibaba demonstrates that emerging markets are far more fertile ground for these sorts of services than developed markets.
• This is due to the quality of the offline experience in emerging markets which is way below that which is on offer in the developed world.
• This means that a mediocre digital experience in emerging markets offers a vast improvement over offline (and will be very popular) which is not the case in developing markets.
• This is why QR codes have worked for payment in China but have been a total failure in the West.
• This is what the Chinese were aiming at because their own experience shows that O2O can be a larger revenue opportunity than the Digital Life services that drive usage on smart devices.
• This opportunity is currently closed off to the Chinese and I think it is exactly what I think Jio Platforms is aiming at.
• Google and Facebook are major shareholders indicating that a replication of Digital Life services in India is not the plan.
• Having Facebook and Google onboard will help Jio Platforms as the services will be optimised for the devices that Jio offers with its services making a better ecosystem experience all around.
• Services like WhatsApp and Google Pay will also be used to facilitate the transactional elements of the services that it offers.
• The trick now is to come up with the O2O services that Indians will adopt in droves and this is where the risk lies.
• I suspect that Jio Platforms will be taking most of its cues from China where this has succeeded
• Now that China is effectively blocked from the Indian market, there is a window of opportunity for Jio Platforms to ensure that a regulatory barrier becomes a market barrier.
• Jio is in pole position to dominate the O2O market in India, which is what the investors have paid for, but now it is all down to execution which is always the most difficult bit to get right.
• This is one to keep an eye on especially if there is a separate listing outside of the large Reliance Industries group.