You used to talk about Flipkart in India, now sitting in China's lap

When the virus of American entrepreneurship took its place in India, many startups like Myntra, Paytm, Zomato started emerging. One of these startups was Flipkart. Flipkart has proven to be such an e-commerce platform that seeing that it is perhaps the one that can leave behind a big giant like Amazon and establish its roots in India. However, over the past few years, this platform has suffered one loss after another and now the situation is such that the platform which at one time could have become a competitor to Amazon, is now sold to China.

About 1.84 for Binny Bansal Only the percentage remains

According to recent reports, Chinese tech giant Tencent bought a $264 million (about Rs 2,060 crore) stake in Walmart-owned e-commerce company Flipkart from its co-founder Binny Bansal through its European branch. . This transaction was finalized on October 26, 2021. However, this news was shared with government officials early this fiscal year. After selling her stake to Tencent Cloud Europe BV, Binny Bansal now only has around 1.84% stake in Flipkart. Meanwhile, another Flipkart co-founder, Sachin Bansal, in 2018 already sold his entire 5.5% stake in Flipkart to Walmart for $1 billion.

A person familiar with the matter said: “Tencent is an early investor in Flipkart and the transaction took place last year when SoftBank invested $3.6 billion in Flipkart along with several sovereign wealth funds. At that time, Binny Bansal had sold part of her stake to Tencent.

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Due to the geopolitical tensions between India and China, the government had issued Press Note 3 (2020 series) in April 2020 in the early days of the pandemic, to verify investments made by any Indian company from neighboring countries of India. Accordingly, the company is required to inform the government of these investments in time.

However, according to sources, the Tencent-Bansal deal does not fall under ‘Press Note 3’. Indeed, Tencent’s stake is less than 1% and Flipkart, although it only operates in India, is registered in Singapore.

Flipkart was launched in India in 2007 and online sales started in 2008. While Amazon came to India in late 2013 and just three years after launching in India, Amazon (Amazon Seller Services Pvt Ltd) overtook Flipkart in terms of gross sales in July. Amazon has overtaken Flipkart in the market due to its superior customer service and user-friendly base.

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Flipkart’s reputation plummets

Flipkart then lost its coveted position as the Indian arm of arch-rival and model Amazon as the biggest e-commerce company in India.

Mounting losses, stagnant sales growth and hyper-aggressive competition weighed on Flipkart. Many pundits and investors have openly said that Flipkart shouldn’t even think about competing with Amazon. So, did this huge loss and growing weakness against Amazon cause the founders of Flipkart to sell their shares to a Chinese company?

There are many Indian companies like Swiggy, Byju, Udaan that Tencent is invested in i.e. Tencent money is invested. The government had banned several apps over the years, including Tencent Group’s PUBG. The government took this step after the clash between Chinese soldiers and Indian soldiers in the Galwan Valley.

Whatever the reason Binny Bansal sold her shares in Flipkart, this news comes at a time when the US Secretary of Defense has warned of growing Chinese activity on the Indian border. What the consequences will be, only time can tell.

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