A China focus

Print edition : March 13, 2020
The book explores what Chinese companies would like to do in India in the future.

THIS is a remarkable work on what India’s businessmen and policymakers must learn about China’s markets and companies. The author, Saibal Dasgupta, points out that Chinese companies have often grown 10 times or more in their home market and have outdone their competitors. China’s trade surplus with India in international trade stood at $351.76 billion, but India ended 2018-19 with a trade deficit of $103.63 billion. The book explores what Chinese companies would like to do in India in the future. The Indian government has attempted to bring about changes in order to improve Chinese investment in the country.

Strategy comes naturally to the Chinese, who play the strategic game mah-jong in their daily life. Chinese businessmen negotiate intuitively. The Indian businessmen who talk of Chanakya’s tactics rarely use them. The opportunities in India for business collaboration are explored. The voices of 40 Indian and Chinese business executives, experts and officials are brought out. The book has 11 chapters, including one on “Trump Effects”, and nine case studies.

The book comes in the wake of the recent “informal summits” between President Xi Jinping and Prime Minister Narendra Modi. India should have joined China’s impressive Belt and Road Initiative. This might have reduced the importance of the China-Pakistan Economic Corridor and prepared the ground for the resolution of India’s border conflicts with both countries.

Opportune moment

The opportunities for foreign companies, including Indian ones, to trade with China are enormous. China faces a variety of international pressures, including an ongoing trade war with the United States, which would have made this an opportune moment for India to strike a deal with China.

In the eight years from 2005 to 2013, China made only three major investments in India, worth $224 million. An investment revival took place after Modi came to power in 2014. India is the second largest shareholder of the Beijing-based Asian Infrastructure Investment Bank and the Shanghai-based New Development Bank, which is led by the Indian banker K.V. Kamath.

In the first chapter, the author provides a case study on the Indian entrepreneur Rajendra Singh Pawar’s success story. Pawar, chairman of the NIIT Group, is an educational giant who spent years learning the Chinese way of doing business. He established information technology teaching facilities in over 100 universities and institutions in China, which have trained over half a million learners.

The author mentions the nearly 1,000 small and big Chinese companies that have built their presence in India. China is expected soon to be in the list of the top 10 sources of foreign direct investment in India. Moreover, “India can be a big profit-making destination for foreign countries which persevere in the face of several hurdles... ”.

The author explains with examples that the Chinese adopt a “cluster approach” whereby they go to places where other Chinese have gone before. However, investors in India face difficulty over the availability of land.

Investors from China have intelligently synchronised the government’s “Make in India” policy with their investments. In the automobile sector, Chinese companies are rushing to compete with their Indian and Japanese counterparts. The Government of India is opening up vast opportunities for the export of Chinese-made batteries and encouraging battery makers to produce them in India. China is the world’s biggest manufacturer of lithium ion batteries.

The author cites several Chinese brands whose names are on the lips of Indian consumers and mentions the significant investments China has made. He refers to a highly successful book, The War for China’s Wallet: Profiting from the New World Order, and its prediction that much of the Chinese money that will be displaced as a result of the trade war with the U.S. will flow into India. He provides an interesting case study of the Chinese business advisory firm in India called Draphant, whose name combines syllables from the words dragon and elephant. The challenges of collaboration between Chinese and Indian companies and the role of venture capitalists are explored with two case studies. The author provides interesting tips on negotiating techniques and the cultural ways of the Chinese. Indians doing business in China have learnt to use interpreters without losing anything in translation.

Chapters 7 to 11 and the conclusion, titled “The Path Ahead”, are important and merit careful reading. Chapter 7 discusses the balance of trade between India and China followed by an analysis of the public discourse that may affect business. Chapter 9 examines the views of three eminent Indian intellectuals on India-China relations.

The next chapter explores people-to-people linkages with a unique case study of a teacher’s role in Chinese investments in India. Another case study connects Indian music to Chinese ears: a significant pointer to future cultural developments. President Trump’s policies on India and China are then examined with a call for the de-escalation of the trade war and restoration of the globalisation process.

Finally, the author notes the huge potential and scope for Chinese companies to invest in India. The compelling story of the Vinmart Group, which exports cobalt from the Republic of Congo for sale in China, is narrated.

The Chinese perceive the main obstacle for them in India to be red tape. For investment, they prefer India’s digital communications sector. The Chinese economic decision-making follows Deng Xiaoping’s advice of “Let some people get rich first”. China’s growth in urbanisation is driven by state management and state construction. Its success stories are in the areas of information and communications technology, marketing and housing construction.

The author cites the ancient Chinese philosopher who said human beings give primacy to their own self-interest. This seems to be the essence of China’s hybrid state capitalist system.

K.S. Subramanian is a former senior civil servant and scholar on China.