28 March 2014
" Made In China " - A Threat for India ?
Yesterday I received a call from an Entrepreneur friend of mine who is into manufacturing. While talking about his business, he asked me an interesting question which is the seed for this article. Let me quote him, " I have spend the last ten years bringing up my Company with lot of pain and we were extremely competitive in the market till recently. But now we're getting killed by imported products from China. How can we stay alive? "
I guess he asked me this question, since I had the opportunity to travel around the world over the past several years ever since I got into the foreign trade business for my Company. One Country I have often traveled to is China and my first visit was a decade back, during 1998. I could travel across China to various Provinces and interact with Entrepreneurs , Middle and Top Executives from different industries.
Coming back to the question my friend asked me, will there be any manufacturing jobs left in certain sectors in our Country if Chinese keep lowering and lowering the price of their products? Can our Government always protect the local industries with a temporary ban ( like the Chinese Toys banned for six months recently ) or keep on imposing anti-dumping duty? I know there is no easy answer to this China question! On the other side, we hear about China's problems - being an export depended economy how they are hit badly with present recession, its scarcity of middle managers, poor Intellectual Property Laws and the massive number of poor farming families moving into unprepared cities with not enough jobs to support them. We have also heard about Country's Banks troubled with close to 20% bad loans.
But I feel, for China these aren't mountains to be scaled, and they have grown big enough to handle any crisis. Increasing prosperity from spectacular economic growth over the past twenty years has given the Chinese enormous self-confidence. And China has more, a massive pool of low-cost, hardworking laborers and a rapidly expanding number of well-educated engineers and English speaking youngsters.
And, then, they have their work ethics, which may be their single biggest strength. Entrepreneurship and competition seems to be baked into the Chinese culture. During my last visit to China, I was watching a Television Program on the legendary political leader and statesman of Communist China, Mao Tse-tung. It showed his visits to all the villages and in all his speeches, he kept on telling his country men one thing, "work hard, work hard for the country " . No wonder, even today they follow Mao's ' work hard for the country policy '. I was at a city called Taishan and a girl visited me to have a business discussion traveling 320 Kms! She said every day she's at the office from 7.00 am until 6 p.m, goes home to join her husband and son for dinner till 8.00 pm., and then returns to work until midnight. " This is very typical here ", she said, six days a week " !
So faced with the inevitability of China, what do we do? First and foremost, get out of the tank. The sense of panic I heard from my friend is perhaps understandable and he could be one among several like him, but it doesn't take us anywhere.
It's not as if our country is next to any other country. We have a large consumer and industrial market, all thirsting for products, with great brands and distribution networks. We have an open economy and mature legal systems. Ours is a transparent society with democratic government and good education and good social systems. Even though the world has just discovered it, our growth story is not new and we are heading to be the world's largest economy sooner or later.
Our business has fully developed management processes. Many of our Corporates have gone global and successfully acquired several Big Brands and Companies. The rise of globally competitive Indian Companies like Reliance, Jet Airways, Infosys, Wipro, Ranbaxy, Tata Motors, TCS, Bharati, ICICI tells the story of Indian success. I am sure, the Indian success is market led whereas China's is state induced.
Posted by Pratik Panchal on March 28, 2014