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Indian
companies upbeat on China: CII Survey
Service
Sector in China offers tremendous opportunity : CII Survey
The
Confederation of Indian Industry (CII) conducted a survey of some
leading Indian companies in China to understand the growing
relationship between industry in India and China.
The
survey, conducted on the occasion of the Prime Minister Mr
Atal Bihari Vajpayee’s visit to China, points to the growing
number of business arrangements between companies in India and
China. CII released the survey today on the eve of the departure of
the Prime Minister to China.
Mr
Anand Mahindra, President, Confederation of Indian Industry is
leading a 40 member CII delegation accompanying the Prime Minister
to China. The CII delegation, which will in Beijing and Shanghai
next week, is the largest delegation from India visiting China.
Confederation
of Indian Industry will open its office in Shanghai next week and is
also organising a “ Made in India “ Exhibition and “India-
China Hi-Tech show” from 16-19 October, 2003 in Beijing.
The
sectors that were surveyed by CII include stainless steel,
information technology, banking, pharmaceuticals and consumer goods.
The
Survey findings
The
big boom?
There
has been a substantial increase in Indian companies entering China
in the last one year, which reflects the growing interest of Indian
companies in doing business with China There are, however, many
companies in the information technology and pharmaceuticals sectors
who have been in China for over five years.
In
the
services
sector, the main players are in the IT sector. This area, therefore,
provides a huge potential for further development. The sectors where
India and China can work together in the service sector include
tourism and hotel industry, health care and educational services for
technical education.
Another
point that has been brought out by the CII survey has been the
change in the nature of business between India and China. Earlier,
the focus was “trading “but now it is moving to
“manufacturing”. And in manufacturing, the
approach is to have joint venture companies.
The
success of these joint ventures can also mean that the two Asian
giants can also look at the possibility of joining hands to set up
joint ventures to service third country markets.
Why
China?
The
reasons for entering China was mainly to tap the large domestic
market available along with its fully developed supply and demand
chains, according to the CII survey. Indian Companies have looked at
China as a manufacturing base to take benefit of the low cost of
capital, excellent infrastructure and an overall business friendly
environment.
In
the long term, these Indian companies want to use the base in China
to also enter other markets in ASEAN.
Local
laws
The
good side of doing business in China, according to all sectors
surveyed is the fact that licenses for setting up shop or even trade
came fast. Most companies got their approvals under six months. Over
60 per cent of the companies got the work done in under six months
while the remaining got in under one year.
Like
in any other country, there are some issues for doing business with
China. These include problems of language, lack of clarity regarding
certain domestic regulations, red tapism, lack of right talent for
all jobs and lack of proper protection for intellectual property
rights.
How
China is different?
China,
according to the companies surveyed by CII, is very different from
most other countries in many ways.
The
first
impression
is that the Chinese government welcomes foreign direct investment
and
does
not
seek too much documentation for companies setting up ventures in
China.
The
second
is
the high level of
decentralisation
between the provinces and the centre in terms of attracting FDI.
Most provinces do not need any central clearance when the FDI amount
is not very high.
Infrastructure
and communication facilities in China are as good as in any
developed country.
On
the negative side, however, companies feel that the skill set of
workers is not as high as India and the legal machinery is too
complex for a foreigner to understand and use.
The
Future Plans
Indian
companies are very positive about doing business in China. Most
companies felt that China as a market cannot be ignored and to
service a large domestic market in China, it will be very important
to be present there.
The
sectors which have tremendous potential for growth for Indian
companies in future amongst others are IT and IT enabled services,
steel, financial services ,consumer goods, auto and auto components,
telecommunication, oil and gas, medical equipment, pharmaceuticals,
agricultural chemicals, plastic materials and resins and food
packaging equipment.
New
Delhi
21 June 2003
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