Sir Martin Sorrell believes Facebook's investment in India's largest telco, Reliance Jio, is both an early indicator of global-local business collaboration that will happen as a result of COVID-19, and an indicator of the agility of the technology sector in the face of adverse economic conditions worldwide.
Speaking to Campaign Asia-Pacific just hours after the deal was announced, Sorrell, one of advertising's most prominent spokespeople, believes the "unification" of global and local businesses will be accelerated by the COVID-19 pandemic.
"I think [the Facebook-Reliance Jio deal] is really interesting because it unites, in this particular case, a global company with a purely Indian company," he said.
Sorrell, executive chairman of S4 Capital, said the deal acknowledges the fact that small businesses in India "are key from a distribution and political point of view". The retail sector in India, for example, is dominated by local 'kirana stores', which account for 88% of the country's retail trade.
"I think it's a brilliant move for Facebook because India is a market which is difficult to crack for outsiders...Mark Zuckerberg and Sheryl Sandberg have understood that to penetrate the Indian market, you couldn't do much better than having Mukesh [Ambani] as a partner...because he knows India inside-out," Sorrell said. "Reliance is a purely Indian business and it's quite unique."
Noting recent conversations he has had with Indian entrepreneurs, he believes the country may still be facing a "significant problem" with COVID-19 as temperatures drop (average temperatures across India peak in May and then decline).
"Indian entrepreneurs that I've talked to recently are very worried about the resurgence of the virus, the inability to control it, and the gap between the North and South, between developed and what others call developing, or faster growth markets," he said. "That is a very significant potential problem."
One of the business impacts this could trigger is an "evening out of competition between the local businesses and the multinationals", Sorrell predicted.
"The impact of COVID-19 is not apparent yet, [but] I think what it may do is level the playing field," he inferred. "What you'll see, I think, is that coalescing of global and local... global companies acknowledging the power of local businesses, local businesses acknowledging the power of global."
Sorrell also noted that Facebook's significant $5.7 billion investment in India—at a time when many businesses are putting in place significant cost-cutting measures—points to the health and agility of the technology sector.
"Every single client that we deal with says their organisation doesn't move fast enough," he said. "The tech clients have a big advantage because they haven't got the barriers. You know, here we are in the midst of COVID-19 and what does Facebook do? It pivots in India and deploys $5.7 billion to make an investment," he said. "You see the flexibility of the tech sector—whilst everyone else is looking at their boots, they are looking at the sky."
While Sorrell is "concerned" about the potential impact that COVID-19 will have on India in particular, his appetite for investment in Asia "hasn't dampened it in any way whatsoever", he said.
"It's probably made me more enthusiastic," he said.
Campaign Asia-Pacific will have more from our wide-ranging interview with Sorrell in coming days.