Tatas to double China revenues

Written by MG Arun | Mumbai, Feb 25 | Updated: Feb 26 2008, 06:20am hrs
The Tata groups investment plans in Bangladesh may have hit a rough patch, but it is steadily gaining a foothold in China. Despite growing competition from local companies, Tata expects to double revenues from Chinaprimarily from TCS and Tata Steelto $600 million this year. It will also see sourcing from that country double to $500 million.

Alan Rosling, executive director, Tata Sons, told FE, China is a very dynamic, competitive and ambitious country. We, as an industry, need to figure out not only how to work with China, but also how to compete with it.

The Tata group has been in China since 1986, albeit in a small way. Now, that country is seen as a priority in Tatas efforts to internationalise. Says Rosling, Our interest in China is three-fold. One, we are selling in China. Two, we are making things there. And three, we are buying things from that country.

In 2007, the Tata group put on hold plans for a $3-billion investment in Bangladesh, as Dhaka developed cold feet over what would have been that countrys largest foreign direct investment in over 30 years.

In China, the group opened an office in Shanghai in August 2006. TCS, in partnership with the Chinese government and Microsoft, has signed a joint venture agreement to develop a software business in China, employing 1,200 people. The firm also won a $100-million contract from Bank of China.

Tata Steel, with the takeover of NatSteel, bought two rolling mills in China, and these facilities are being expanded. Another group company, Taco, is setting up a factory in Nanjing to make plastic parts, while Tata Refractories has also opened a plant in China.

Says Rosling, The most difficult is selling things in China." The growth in steel exports to that country has slowed since Chinese steel companies have become more competitive. The group is now betting big on TCS, at a time when Chinese companies are investing heavily in IT.

China is making strides in telecom hardware, power and heavy industry equipment, says Rosling, adding that more Chinese companies are collaborating with companies in the developed world, and this has made them technologically competitive.