#BoycottChineseGoods: national sentiment and business are tough to mix

At a time when social media is erupting with anti-Chinese sentiments and appealling to the masses to stop buying products manufactured in India’s neighbouring country, the business collaborations tell a different story. Festive season in India is marked by a tradition of lighting up the homes and China produces the most cost effective and technologically advanced lights that have been in huge demand till date. However this year, it’s different. Many people agreeing to boycott China-made lights have bought India made lights and diyas. While this is a good sign of promoting the small industries of India, analysts aren’t much sure how will that affect the business of China.

China being India’slargest trade partner (nearly $72 billion), it supplies India with finished goods as well as raw materials for sectors as diverse as toys, electronics and auto parts.

Giant lobbies of industries in India such as CII is promoting the collaboration of the two countries. In fact last month, CII organized India-China CEOs Dialogue in Delhi, which was attended by record number of participants from both the countries.

"To make trade more sustainable, there is a need for India to export more goods and services to China, become part of East Asian supply chains, and develop closer linkages of small businesses on both sides,” Chandrajit Banerjee, director-general, CII told the Economic Times.
"We expect more Chinese companies to take a strategic view on growing Indian markets, especially with the ongoing reforms process and progress under ease of doing business,” added Banerjee.

Economists advise caution while dealing with China. "There is great concern about the overhang of Chinese overcapacity in steel, textiles, chemicals and non-ferrous metals like aluminium,” Ajit Ranade, chief economist with Aditya Birla Group told the ET.

"There is fear that excess capacity may lead to dumping by China... (and) compounds the earlier fear that Chinese goods enjoy subsidies in various forms. While China rebalances the economy away from trade to domestic consumption, and despite the promise of Chinese domestic market, the overhang of Chinese overcapacity, especially in manufacturing sectors, may persist,” he added.

Also the Chinese phone market in India is overwhelming. Chinese phone makers contributed to approximately 38% of the smartphone shipment in September as compared with 30% contribution of the Indian smartphone players as per Counterpoint Research's monthly India report.


"While all major brands have succeeded in taking advantage of the festive mood, Chinese players like Xiaomi, Lenovo (including Motorola), Coolpad have outdone others in online sales, taking advantage of selling on multiple online platforms,” Tarun Pathak, senior analyst with Counterpoint told the ET. "Chinese players are providing high-end specifications and innovative design at affordable prices,” he added.

While India is a major country of export for China, the former ranks 19th in the pecking order for its export to China.
"In the last 10 years, while Chinese exports to India galloped at 520%, India's exports to China grew by only 25%... We cannot keep it so skewed. Trade deficit can be partly offset by capital flows in the form of FDI into the country. There is an opportunity for China to invest in long-term infrastructure projects in India, even as India can grow exports in the areas of IT services, pharma, auto ancillaries and tourism,” told Ajit Ranade of Aditya Birla group.