BOTTOMLINE: Fears of cheap Chinese imports unfounded, say experts

The dragon was only so much smoke

P Vinod Kumar

Have China’s red flowers failed to bloom on Indian soil? Though the answer will be known only once the Chinese entry to the World Trade Organisation (WTO) becomes official, early signals suggest that they have.

For, the hue and cry over the flooding of Indian markets with cheap Chinese goods is dimming and more and more Indian companies and experts are calling their bulls out of the China shop. Experts feel that like the red brigade that once roamed Indian villages preaching Chairman Mao’s verses from the Little Red Book, the white goods pouring out of the not-so-red regime of Deng Xiao Ping’s People’s Republic of China also seem to have failed to make a dent in the Indian marketplace.

Just six months ago, India’s apex corporate chambers were raising the alarm about the impending invasion of cheap Chinese goods and advising their members to scurry for cover. The commerce ministry and the designated authority for anti-dumping were flooded with pleas for erecting a tariff wall against Chinese goods.

The smarter among Indian corporates even took a leaf out of the Mandarin’s text and went to the Middle Kingdom seeking alliances for setting up shop or for sourcing components. The most vociferous among the Indian industry were the consumer durable makers, auto and two-wheeler manufacturers, chemical companies and electrical goods producers. But the paranoia seems to be dying out.

The first to call the Chinese threat a hoax is the All India Cycle Manufacturers Association. Mr L Ramkumar, president, TI Cycles, is on record on behalf of the association, as saying: “Despite bicycles having been removed from the bonded category more than a year ago, there has been no influx of foreign bicycles, especially from China, into India. This is because the Indian market is heterogeneous and difficult to cater to unless the importer sets up huge sales and distribution networks.”

Quality is another card that has helped bid against the Chinese invasion. A senior official of AVE, a joint venture between AVE Spa of Italy and the Indian switch-maker, Anchor, admitted that the electrical industry had experienced the sting of the dragon when the first wave of Chinese electrical accessories hit the Indian market, allegedly priced 300-400 per cent lower than their Indian counterparts. But the Chinese threat had collapsed on its own weight when the products failed to withstand the vagaries of Indian power conditions. It is said that the Chinese products, which used recycled thermocarbon, melted down when the power supply crossed ordinary limits.

Jaya Ghalla, executive director, Amara Raja Batteries Ltd (ARBL), is also of the view that there is no threat from cheap Chinese imports. “We are not facing any threat from imported Chinese batteries since we are a quality player. The heat of the Chinese threat is felt only by cheap battery manufacturers, who seldom bother about quality,” says Mr Ghalla.

The news that Konka Electronics, which cast a long shadow over the Indian colour television segment, is winding up its Indian operations as it does not have the financial might to set up distribution networks in India is another example, point out industry sources.

R Gopalan, joint secretary, ministry of commerce and industry, is also of the view that fears about the Chinese threat are misplaced. In his view, India should learn a few lessons from the dragon in how to make its manufacturing sector more competitive.

As the curtains come down on the first round of the Chinese drama, it’s the Indian consumer who has emerged a clear winner. For the Indian consumer has taken a fancy to the maxim that set China on the high road of market economy: “As long as it catches the mice, the colour of the cat does not matter.” Are Indian companies listening?