Welcome China-backed Shopee’s exit from India: CAIT

Traders body Confederation of All India Traders (CAIT) has said that the exit of Singapore’s e-commerce and gaming company Shopee from India is a welcome move as the foreign firm was allegedly operating in the country in violation of the laws of the land. On Monday, Shopee, which had announced its India entry last year, told its employees in a townhall meeting that the company will cease its India operations. Shopee has reportedly also informed the sellers on the platform that the company will wind up its India operations from March 29, 2022.

The announcement comes on the heels of 53 Chinese apps banned by the Indian government on the grounds of national security in February of this year. In this ban was included Garena Free Fire, a mobile gaming app owned by the Sea Limited, the parent company which owns Shopee.

Besides, CAIT had also written to the state authorities alleging that Shopee’s operations in India was illegal since the Chinese Internet major Tencent Holdings has a stake in Sea. The traders body also alleged in its letter that the Singapore conglomerate did not seek prior approval from the Indian government before launching its services in India.

“CAIT first raised its voice when it sent a communication to Prime Minister Shri Narendra Modi demanding ouster of Shopee owned by Sea group which has substantial Chinese investment violating provisions of Press Note No.3 (2020) revising the FDI policy to require that any foreign direct investment from neighbouring countries to India  (with whom India shares land boundaries) would be allowed only after obtaining the prior approval of the government,” Praveen Khandelwal, General Secretary, CAIT said.

“Sea Holdings has significant ownership (almost 25 per cent) by Tencent (a known Chinese investment firm). Also, the founder of Sea, Forrest Li, is originally Chinese, but became a naturalised Singaporean only a few years back. Sea uses Tencent Cloud to store [its] data. Also, Sea’s gaming subsidiary, Garena, licenses most games from Tencent, leading to huge royalties and the investment, [and] ensures that there is significant control and access to data,” he added.

As reported recently by Reuters, early this year, Tencent had raised $3 billion by selling 14.5 million shares, at $208 a piece, that it held of Sea, Shopee's parent firm. Tencent had, thereby, reduced its stake from 21.3 per cent to 18.7 per cent.

However, the e-commerce firm Shopee attributed its sudden exit from India to global market uncertainties.

“In view of global market uncertainties, we have decided to close our early-stage Shopee India initiative. During this period of transition, we will focus on supporting our local seller and buyer communities and our local team to make the process as smooth as possible. We will continue to focus our efforts on delivering a positive impact to our global communities, in line with our mission to better the lives of the underserved through technology,” a Shopee spokesperson said.

India is mulling over giving more teeth to its e-commerce rules, at a time when the foreign companies are making their way into the country to tap into the aggressively growing industry, which has received a fillip due to the pandemic, pushing more people to shop online.