China remains an important market, says Peak XV, formerly Sequoia India

China will remain an important market for investors in the long term, although other countries are now benefiting from investments flowing out of China amid escalating tensions with the United States, according to Peak XV Partners, formerly Sequoia Capital India and Southeast Asia.

“The China Plus One strategy, in terms of sourcing etc., definitely benefits countries like India and Southeast Asia,” said Shailendra Singh, managing director at Peak XV Partners, l One of Asia’s largest venture capital firms with $9 billion in assets under management. management.

“In the very long term, if you look at a period of 10, 20 or 30 years, if you assume that geopolitics will return to a new normal, China will be a huge economy and good companies will be created in China,” he said. he adds. Singh told CNBC’s Tanvir Gill.

Last year, Sequoia split into three independent geographic units: Sequoia Capital in the United States and Europe, Peak XV Partners in India and Southeast Asia, and HongShan in China. This decision comes in a context of increasingly tense relations between Washington and Beijing.

Peak XV has invested in over 400 companies across the technology, software, financial services and consumer space. They include financial technology company Pine Labs, Singapore-based online retailer Carousell and Indonesian ride-hailing service giant. Gojek as well as Indian edtechs Byju’s and Unacademy.

For years, China has been the powerhouse of technology and innovation in Asia, home to tech heavyweights including Alibaba Group And Tencent. It also gained the title of the world’s factory, producing low-cost consumer goods as well as most of the world’s iPhones and electric vehicles.

However, companies such as Apple and BMW have diversified their supply chains away from China due to geopolitical concerns. Apple now reportedly makes about 1 in 7 iPhones, or 14%, in India, after strict Covid controls in China disrupted its operations there.

Even if India and Southeast Asian countries benefit from such diversification efforts as companies expand elsewhere, China will remain an important market, Singh said.

“All of us around the world, even though India or Southeast Asia might benefit in the short term, should really think about how we might work well with China in the long term,” said Singh.

David Roche, chairman and global strategist at Independent Strategy, said in March that India would not replace China in global trade because the Chinese model was “based on gaining global market share” while that the Indian model was “focused on the development of the internal market”.

“India will continue to progress, but it will be slow and steady progress, and not at all similar to the Chinese model,” Roche said.