OUR CHINA BEATERS!
Corona, Ladakh and other things got every Indians’ muscles flexing! Ban Chinese goods, buy Indian and be Indian! The slogans are seen everywhere in discussions, social media and wherever we look. Great idea! But there is a cynical joke. A lot of posters, Ban Chinese goods, buy Indian and be Indian are seen everywhere- the only problem is they were printed and imported from China because these were good quality and inexpensive.
Import and export between nations is not an emotional decision, but such decisions are based on hard bargaining to try and see that both the sides are benefitted- and it needs to be a win-win situation. Import and export values between any two countries are never the same. In the case of China, the import from China is always higher than the export to China for most countries. Why has this happened? China has ensured that the industry grew phenomenally. They maintained quality and lower price than most of the nations in the world. They found efficient ways of sending goods to Europe by using the rail network of Russia. That reduced the transit time by almost 30 days.
Can any nation beat China in their own game? No, it is not easy, and there are other reasons like a dictatorship, lax labour laws and so on. In China, businesses rarely have to face legal hurdles. In democracies, legal issues can really strangle the industry. But is it doable at all to beat China in their own game? Yes, it is feasible, and this “miracle” has been performed by a sector in India. But before this, let me share thoughts of my friend Arvind on the subject.
Nobody, citizens, government, companies or anyone else can stop using, buying Chinese products overnight. The government, unless it officially declares war, can not stop or cancel orders or participation in tenders. It takes time for companies to develop alternative sources. The alternative sources will be costlier since China uses a dumping strategy. Being a totalitarian government, it has many advantages as for labour, company and other laws are concerned.
Atmnirbhar Bharat will be successful only if we as citizens of this country are ready to pay more for some products, initially. Businesses should put the nation first policy too, and the government, bureaucracy and politicians should not manipulate things for pushing their individual interests. Only competent leadership can change the future of the nation.
The link below are views of Rajeev Bajaj, MD of Bajaj Auto and Suzuki India, Chairman Mr. Bhargava. They have spoken pragmatically about China.
I am talking about the Motorcycle industry in India. Motorcycle industry jointly has reached the top position in the world in numbers. In the early part of this century, Chinese companies started pushing their motorcycles in India. The “experts” began writing epitaphs of Indian Motorcycle companies Hero, Bajaj and TVS. But these companies were made of sterner stuff. They got their act together, pulled up their socks. And lo! Within a couple of years, the Chinese bikes were thrown out from Indian markets by customers and not by tariffs and jingoism by Deshbhakts. What did they do? They did the right things.
Those were days when IT companies were on a high, after the success of Y2K in the global market. They started hiring engineering talent from IIT’s, NIT’s and all good institutes. The kids wanted to do only coding in life, engineering career was a no-no. Here was what Bajaj tried. They used to get an opportunity for campus interviews on 7th or 8th day. One year they decided to hire people on zero-day. They told the institutes that they would pay three times the salary that IT companies paid. They got the zero-day slot, but to their surprise, very very few students wanted to join even at such a high salary. All wanted to jump the IT bandwagon. Bajaj reversed their strategy and went to the next level of schools. Changed interview language to Hindi, Marathi, Telugu and Tamil when needed. They got the hidden gems as these kids were good but had a language issue. Rest as they say is history.
Another example of Bajaj. Today they export about 1.8 million bikes a year, their primary market being Africa. In Africa, bikes are used as a taxi or a tempo. Bajaj has earned a name there. Before Bajaj, there were Japanese bikes which were superb but expensive. They had a limited market. The Chinese bikes were sent to Africa in an individual box, and they were assembled by local mechanics and sold. Bajaj made better bikes and despatched them in assembled condition, ready to use. They priced them between the Chinese and Japanese bikes. They have ultimately captured the market and running a highly profitable operation.
So, friends, it is doable. What you need is the will to fight, gauge the market correctly. Besides this, the Motor Cycle industry had the advantage of a large Indian market for Motorcycles. The local market helped them volume, which has proved beneficial.
Coming back to the slogan to hell with the Chinese products. If you look at Chinese cars, they are not so competitive in the world market, yet. But since many global multinationals went to China- Volkswagen, Land Rover, Mercedes, Toyota- all the named companies and others have a significant presence in China. Chinese manufacture seven to eight times the cars that we manufacture in India. In India, we simply do not have a market for more cars. Plus we do not have the infrastructure of roads and pollution control. With smaller numbers, we cannot compete with Chinese in four-wheelers. Mind you, China is still not able to sell “Chinese Branded” cars in the global market. But these vast volumes helped China to create a reliable components industry; the Indian industrial buyers have fallen into China trap due to low price. Many international component companies like Aisin, Denso, Conti, Valeo started China operations in a big way. Corona pandemic exposed the errors made by Industrial buyers. I have discussed this with many senior friends in the industry. The corrective measures have already begun, and over a period, China dependence will come down. It takes time to develop components suitable for your use.
It is impossible to boycott China immediately. It will take at least five years of focused efforts. In automotive products, direct import from China is about 10%. However, many tier two suppliers of the vendors from ASEAN countries import quite a lot from China. It will take time to develop ‘non-Chinese’ tier-two suppliers.
The government can discretely ensure that items like Ganesh Idols, Agarbatti, Patang Manja and such stuff does not get imported from China. These items can not be put on the banned list. So the government can talk to the business community and trade groups to make sure that “Indian” items are not imported. For such things, how do you know that they are cheaper? These are imported simply because trade margins are high. There could be hundreds of such items which can be easily “banned.” This is also doable. When Malaysia started behaving strangely with India, Indian government discretely talked to import organising bodies. Within three months the majority purchase of palm oil was switched over to Indonesia.
The main thrust of India should be to push local manufacture of good quality cell phones, tvs and such things in India. Special efforts will have to be taken. Years back, there was a story of the US pushing the Japanese to allow them to sell the US-made cars in Japan. It was declared during the visit of the US president to Japan, that the market is now open. When the delegation went back to the US and talked to car manufacturers, they realised that the manufacturers would take at least three to four years to manufacture Japan-specific, right-hand drive cars.
So it is good to let out steam, but there is no point in shooting the bullet in your foot! Another point is to find out if banning Chinese goods going to damage Chinese trade more or hit the Indian manufacturing capability? The right way would be do it over a period!