Niche opportunities abound in China

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: During the last 10 years, a sea change has occurred as to how Indian businesses view China. The fear and awe has been replaced by a realistic understanding of Chinese import ‘threat’. Over the decade, Indian businesses acquainted themselves with Chinese markets by visiting Chinese trade fairs and developing business relationships.

However, during this limited exposure to China what Indian businesses, particularly SMEs, missed was the rise of Chinese markets: for imported consumer and producer goods as well as for raw materials and intermediate products for processing for export to third-country markets. Indeed, China is set to overtake Japan as the biggest importer in Asia by around 2015. Many countries, particularly Asean, have lapped up the opportunities in the burgeoning Chinese market.

Asean exports to China increased on average by over 46% a year from the year 2000 to reach $52.4 billion in 2005. That was much higher than the annual growth rate of 4.3% in Asean exports to all markets outside China. Malaysia became the largest exporter to China ($12.7 billion) within Asean in 2003, a position previously occupied by Singapore at $10.1 billion. The previous trade deficits became surpluses in Malaysia and the Philippines, while deficits were lower in Thailand and Singapore in 2003. The Philippines’ exports to China have quintupled since 1999 (2005). Thailand’s exports to China doubled from $2.8 billion to $5.7 billion between 2000 and 2003. The bilateral trade deficits fell to 6% of exports in 2003, compared to 20% in earlier years. Indonesia, Malaysia, the Philippines and Thailand had exported mainly primary products to China in the early 1990s. By 2003, though, information and communication technology (ICT) goods had comprised three-fifths of those products.

If we look at bilateral trade between India and China, it has expanded phenomenally since the ’90s. During 2006-07, China absorbed 6.56% of total Indian exports, while providing for 9.13% of India’s total imports.

In the history of Sino-Indian relations, a very important milestone has been crossed as per India’s Economic Survey 2007-08. China has become India’s largest trading partner displacing the US and India has entered into the top-10 nation list of China’s. The bilateral trade between India and China is growing more than 50% per annum and is slated to cross the $100 billion mark within three years.