April 03, 2020
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For Grandson's Sake

China overlooks diplomatic tangles to eye India's vast market

For Grandson's Sake
There is a tale about the way China Inc does business abroad. A man, tired of going over a hill to sell vegetables, started tunnelling a shortcut through the hill. Passers-by warned him that this could take decades, too long for him to ever use the tunnel. "But my sons will, and my grandsons," replied the farmer.

Wang Zhonghai, head of Tianshi, China's largest herbal food supplements firm—and a recent entrant into India—read the story when he was a child. "We always take a long-term view of both life and business," says the thirtysomething Wang. "We researched the Indian market for years and then set up operations." Then the company quietly shifted its south Asia headquarters from Bangkok to New Delhi and has started roping in distributors in every major Indian city to market its competitively priced products, expected to give ayurveda a run for its money. Says Wang: "Ours are not mere products but civilisation in bottles."

But the word is out: India is China Inc's next frontier. Days before the Indian embassy in Beijing began finalising modalities of Zhu Rongji's visit, it received a call from the Plastic Manufacturers Association of Canton which wanted details on the Indian plastic industry. "The next day, a 182-strong delegation landed up," says an MEA official. A similar mood prevailed in the deliberations conducted by the 25-member business delegation representing 39 key state-owned enterprises that accompanied Zhu. A week before the Chinese premier landed, a delegation was sent by the All China Lawyers' Association to study the Indian legal systems. "It assumes significance because of China's recent inclusion in the WTO and its emergence as one of India's largest trading partners," says Lalit Bhasin, senior functionary of the Bar Association of India.

And once the message was clear that Chinese business houses could run their show sans major tensions, it was a veritable flood of contracts, both with private and state-owned companies, all aimed at increasing trade that currently stands at $3.5 billion from a lowly $895 million in 1994 (China's global trade stands at a whopping $475 billion). Says an MEA official: "At times, it seemed neither of the two nations was keen to talk about the border issue or Pakistan."

"China's total FDI inflow was $105 billion in 2000," says Yu Xiaosong, chairman, China Council for the Promotion of International Trade. "A portion can be re-channellised for India-China trade." Agrees Arun Bharat Ram, chairman, CII International: "China's entry into WTO will change trade levels between the two countries. It should touch $15 billion in the next five years."

That China sees India as a huge potential market was clear from Zhu's speeches which repeatedly exhorted Indian companies to form joint ventures for mutual benefit. Reminding Indian corporate captains in Mumbai and Bangalore that New Delhi's trade with Beijing equalled that of Vietnam, the Chinese premier said that more collaborations would mean reduced prices of products in India. "Time has come to exploit each other's markets as between us, we have one-third of the world's population but very few business relations," said Zhu, asking Indian companies to import cheap Chinese consumer goods. "I asked my men to check out the prices in the Indian market and found most consumer goods cost at least three to six times more."

There were many agreements—for increased inter-nation tourist flow, space research, science and technology, and providing hydrological information on the Brahmaputra, four decades after this stopped. "This will help India develop its water resource management plans, especially in the catchment areas of Assam and Arunachal Pradesh," says Himanshu Thakkar, South Asia Network of Dams, Rivers and People.

Besides the customary Agra and Delhi, Zhu and his men also had Bangalore, Hyderabad and Mumbai on their itinerary and signed deals worth $250 million. Minimetal, China's largest mineral trading company, signed deals worth over $125 million to purchase iron ore, aluminium and coke. Other areas of possible cooperation are IT, environment, energy and agro-processing. Air China will start three-times-a-week Delhi-Beijing-Delhi flights and China Eastern four times-a-week Delhi-Shanghai-Delhi flights from March. The dragon's scaled the wall and is keen to explore
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