We must continue to trade with China, says Rajiv Bajaj

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February 28, 2021 5:00 AM

Bajaj Auto is already working through partners to enter the three or four ASEAN markets where the company is not present as these are strongholds for Japanese companies.

The universal focus now should be to broaden and transform stable supply chain capabilities for an acceptable global stance.The universal focus now should be to broaden and transform stable supply chain capabilities for an acceptable global stance.

Rajiv Bajaj, managing director of Bajaj Auto, on Saturday said India must continue to trade with China. “We must continue to do trade with China because if we conduct our business at the exclusion of such a large country (and) such a large market, we will find ourselves incomplete over time and we will be poorer for the loss of that experience,” Bajaj said.

Bajaj stressed on the importance of maintaining continuity for having reliable supply chains. He drew attention to what happened around June-July last year when the Indian government suddenly came down hard on imports, especially from China. “To my mind, doing something like that is to cut your nose to spite your face because overnight how can one source components that are simply not made in the domestic market that you need to deliver products in the domestic or export customers?” Bajaj said.

When it comes to competitiveness, Bajaj said it was cheaper to make something out of China and sometimes cheaper to procure something from Thailand. He suggested that companies should always procure stuff from wherever it is most competitively available. Bajaj was speaking at the Asia Economic Dialogue 2021, addressing a panel discussion on ‘Building Reliable Global Supply Chains’, organised by the ministry of external affairs and Pune International Centre.

He pointed out that a global company like Bajaj Auto has to be inclusive and it was important to have dealers, distributors and suppliers from all over the world. When dealing with suppliers, there was also a need for compassion, as Bajaj has 225 suppliers, many of whom are exclusive to the company or depending largely on them, he said. “At the end of the day, we are all interdependent.”

Bajaj Auto is already working through partners to enter the three or four ASEAN markets where the company is not present as these are strongholds for Japanese companies. So Bajaj, along with KTM, is putting together a smart strategy to make their way into Vietnam. They have entered Malaysia through a relationship with a partner there, another partnership for Thailand, and with KTM to the Philippines.

He struck a note of caution about the ease of doing business in India when compared to ASEAN countries. As the company hopes to venture into the Asian market in a significant way, an elaborate comparison on certain metrics of land, labour, electricity, logistics and legal system was carried out. After an exhaustive comparison of India, Vietnam, Indonesia, Thailand and Malaysia on these five metrics, the company came to the conclusion that the ease of doing business in these ASEAN countries is easier than what they encounter in India.

On the electrical vehicle opportunity for India, Bajaj said electrical vehicles have not moved forward as much or as swiftly as they should have in the country because of the inertia of the incumbents, as they don’t want to replace a profitable petrol and diesel vehicle overnight with a loss-making electric vehicle. His company started its electric vehicle business with the Chetak scooter because they did not have an existing ICE engine-based scooter business, so the company has no vested interest in keeping petrol scooters going, he said. He is optimistic of two-wheelers and three-wheelers transitioning to electric, as these are light vehicles and the major hurdles to electrification such as size of battery, cost of battery, charging time and range get mitigated to a large extent. The government is keen on electrical vehicles, with Niti Aayog, MORTH (ministry of road transport and highways) and the PM driving this strongly, and Bajaj Auto is excited because it puts them at the starting line with the rest of the world, he said. “On motorcycles, we had to play a huge catch-up of time lost of 50 years. Here, we are almost at the starting point like everyone else,” he said.

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