Indian companies upbeat on China: CII survey

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. 

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. This was revealed in a a survey conducted by The Confederation of Indian Industry (CII) of some leading Indian companies in China to understand the growing relationship between industry in India and China.

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 sectors that were surveyed by CII include stainless steel, IT, banking, pharmaceuticals and consumer goods. 

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.

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. 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.

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 decentralization between the provinces and the center 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.

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, telecom, oil and gas, medical equipment, pharmaceuticals, agricultural chemicals, plastic materials and resins and food packaging equipment.

Cyber News Service