Riding Chinas Economic Dragon

Shanghai, April 11 | Updated: Apr 12 2004, 05:30am hrs
When R Venkataraman came here in 1992, the diplomatic mission couldnt think of a single Indian who might qualify for the Presidential Reception. Indians had abandoned Shanghai in large numbers since 1949. All that remained of them were stories of a Sikh regiment which the British had stationed on the Bund and the Gurudwara that had to be abandoned.

But if President APJ Abdul Kalam came by today, consul-general Sujan R Chinoy could afford to pick and choose. Besides more than three dozen Indian companies who have stationed reps in the hope of making money one day, an unreported chapter of the Indian success story are Indians who are today heads of operations of global MNCs.

Murali Sivaraman is managing director of ICI China. Amit Chatterjee is president of Sara Lee H&BC China. Atul Singh is head of operations of Coca Cola. Anil Advani is GM of Sozhou Pfaudler Glass. Satish Rao has the same position in McCormick Shanghai Food. Among the traders, the big name is Sunil Chuggani, proprietor of the Jayakara Group. Some Sindhi, Punjabi and Gujarati businessmen have started re-locating from Hong Kong or Taiwan. Others pass by every week or so.

It isnt just CEOs and reps, explains Chinoy, a China-watcher for 18 years, even as an assistant executes his instructions for coffee, delivered in perfect Chinese.

Today, the doorman in the JingJiang Hotel, where Venkataraman stayed, is an Indian. Theres another one at the Radisson. There are food and beverage managers, event managers. There are one dozen Indian restaurants, Hindi classes that Indian ladies run on Fridays, an informal club, food bazaars, boat cruises, even a fashion show and a sit-down dinner for 300 that came about at the Holiday Inn because the F&B manager was an Indian. 450 or so are in touch with us regularly, says Chinoy.

Then there are financial analysts and single-income-no-kids types who have been headhunted from Singapore and western B-schools because they cost barely half of what an American manager would.

Having faded out once before, the Indians here remain a cautious bunch. They do not speak on the record and they seem to realise that one word out of place can throw them out of reckoning for ever. The reason, as one of them explained, is that the government here has three roles: it is the consumer of what these Indians seek to sell, it is the regulator of this confusing marketplace, and through its web of SOEs (state-owned enterprises) and crony capital it is, more often than not, their competitor too.

Like other MNCs in China, companies like Aptech, NIIT, Jubilant, Essel, ICICI, Aditya Birla, Ranbaxy, Sundaram Fastners, and Voltas work within a complex net of pitfalls and opportunity. Employees are engaged through a government-owned company. Each clearance is a bagful of documentation in Chinese, often not quite understood, but almost always done through an agent of the government. A ten per cent additional tax has to be paid after all expenses have been added. The market in remote provinces is a chimera: local city lords take months to develop even basic degree of comfort even as bosses back in New Delhi and Mumbai get impatient why the orders arent coming in.

Presentations in Chinese often bomb because very few know what exactly needs to be written as per local sensitivities. Fewer still know proper Chinese. Chinoy runs an open house for any Indian company if it wants to run through their power point presentations with the mission.

Beneath all the hype, the domestic market here is the hardest one to crack. Brand India is non-existent and the Chinese would much rather pick up what they want from the Americans or the Japanese. The Germans have been around too and as Seimens discovered by investing in Shangais showpiece magnetic rail to Pudong Airport, its a long haul to get contracts outside of the basic supply of raw material. Even raw material like iron ore isnt easy to sell if you dont know the language or the right provincial leaders.

Those like Sundaram Fastners need to be here because thats the only way they might be allowed to source to their partner here. Aditya Birla is out here exploring the value chain in viscose fibre and textiles. Bharat Forge sells crank shafts to the WuXi diesel works.

Counterfeiting remains the hard nut to crack. So does Chinas costing system. An Indian tyre maker has been touring China for several weeks trying to establish how his rival is able to roll out products at one-third of the cost. He hasnt found the answer. What hes doing now is to ship some samples to try and literally cut through the problem. He has company. A Korean sports utility vehicle maker can do nothing even as a manual assembly line run out of a factory shed rolls out illegal variants that actually move.

Shanghai, Pudong and neighbouring Suzhou handle nearly 40 per cent of Chinas external trade. Once its viscose fibre plans come through the Aditya Birla Group will become India Incs largest investor in China.