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China Inc: In India and Loving It

China Inc: In India and Loving It

Author: Binoy Prabhakar
Publication: The economic Times
Date: July 10, 2011

Introduction: Chinese companies' expanding India operations have meant a growing number of Chinese business executives now live and work here. Their stories are happy and quirky. Some don't want to go back

Eric Yu had had picked India on a whim. An hour had barely passed after arrival when the first pangs of regret began stirring in his mind. The taxi driver who was to receive him at the New Delhi Indira Gandhi International Airport was missing. Many anxious moments later, he managed to find the driver - after parting with $5 at a public telephone booth. Crossing the Himalayas had lost some allure for the president of enterprise business of telecom equipment maker Huawei Telecommunications (India) Co Pvt Ltd. The smattering of English on hand suddenly looked woefully short.

Seven years later, in his sparsely furnished office in Gurgaon, Eric, smiling confidently behind his glasses, says he has no plans yet to return to China.

"Actually when I am in China, I feel like a stranger. I am more at home in India," he says without missing a beat. "I feel I am part of the society here."

Eric is part of a growing cadre of Chinese businessmen who have tied their fortunes to India's star, attuning their lives and crafting corporate strategies around a booming 1.3-billion-person market. In the blizzard of clothes, chemicals, metals, electronic goods and toys from China, one key export to India - executives - has largely gone unnoticed. The number of visas issued to Chinese executives increased nearly four-fold to 60,000 between 2004 and 2010, according to Chinese embassy data.

Like Eric, the scrum of Chinese businessmen turning to India is typically skittish about a posting due to a medley of prejudices, doubts and a history stuffed with animosity. Eventually, they become ensconced in a society that they say embraces them unreservedly.

"Indians are warm and kind," says Shi Mingli, assistant representative of China Minmetals, who came to India in 2008.

Incredible India

Shi was not referring to Indian authorities. But thanks to the comity of ordinary Indians, Chinese executives who have spent years in India say their fears of tiptoeing through a minefield were largely unfounded. Far from it, many have played a starring role in their companies' breakneck growth because they have coalesced into the Indian ethos with unbridled enthusiasm.

Chinese businessmen regularly attend marriages of colleagues and friends. The groom arriving on a white horse never ceases to amaze them. They are enthralled by the dancing and the music. They love Indian food; tandoori chicken tops the list of favourite dishes. Kingfisher beer is not a patch on Chinese liquor, but is still popular. The malls in Delhi, Mumbai and Bangalore are a shopper's delight. "So many vibrant colours, different styles and no repeats." They watch Indian movies. "3 Idiots was very funny; Slumdog(Millionaire) had nice songs." They match their soccer skills against Indian colleagues.

Some like Yao Wang Deepak, head of corporate affairs at telecom equipment maker ZTE Telecom Indian Pvt Ltd, have taken Indian names because they are "fascinating". Others like ZTE CEO Cui Liangjun have picked English names like Steven for the benefit of Indians.

Indian 'habits' have rubbed off on others like Liu Peng, GM Wireless of ZTE. "Friends say I have become slow."

India also offers a raft of picturesque holiday spots. The backwaters of Kerala and the deserts of Rajasthan are choice destinations. Kochi, says Liu, "is the best place in India. So beautiful, quiet, and lots of seafood." In Jaisalmer, Liu says he slept in the desert. "India is an experience for life."

For many Chinese, the India story has played out like a series of never-ending sequels. "I was not keen to come to India. But India was a big shock to me. It is just as modern as China," says Liu. His idea of India was built on a diet of Mithun Chakraborty movies. That India was "traditional" and the malls, restaurants and roads that greeted him in India came as a pleasant surprise.
Easy Going

Indians too would be just as surprised with the attempts of Chinese businessmen to adapt, given that they were screaming foul at Indian conditions not long ago. "They have taken to India just as a duck takes to water," says an Indian businessman who has interacted with Sinosteel executives.

One reason could be that the Chinese affect a down-to-earth and affable demeanour. Alka Acharya, associate professor of Chinese Studies in the Centre for East Asian Studies, Jawaharlal Nehru University, says the Chinese make a concerted attempt to understand Indians. "They study us much more than we do."

The Chinese say the only big turnoffs in India are the heat and traffic. Language is a "bit problem".

What about Indian Chinese food? "Sorry, not very good." Chinese food in India, says Chen Jianping, deputy general manager of public relationship department at Sinosteel Corp, "is a little different from typical Chinese food". "It mixes with local sauces."

No worries though. ZTE brought two Chinese cooks from back home. Shi taught his Indian chef to cook. And Chen visits a Chinese restaurant that has a Chinese chef.

Most Chinese businessmen that ET on Sunday met have been in India for more than four years. And they are hardly in a hurry to return. Liu, for instance, arrived in 2007. He says he'll stay put as long as business is good.

If that is so, he is in for a long haul. ZTE's turnover in India grew to nearly $1 billion from $100 million between 2004 and 2009. ZTE came calling with two Chinese employees. Today, the number has grown to 300. India is its largest overseas market.
India Moment

"India is a strategic market for ZTE," says the company's India CEO Cui Liangjun.

Other Chinese companies too share this voracious appetite for India, thanks to a thriving economy back home, steadily bolstering the notion that the country is pivotal to their overall strategy.

"India is the second-largest market globally," says Max Yang, CEO, Huawei India, which is growing at 35% a year. Nearly 7% of its 4,000-odd employees are Chinese.

The company owns an R&D centre in Bangalore, the largest outside China, where Chinese constitute around 10% of the workforce of 2,200. Huawei said last year it will spend $2 billion for expansion, besides adding a new research and development campus in Bangalore with 2% Chinese employees.

Chinese PC maker Lenovo is also betting on India. "India is one of the most significant emerging markets for Lenovo due to its burgeoning youth population and booming industry," says Lenovo India MD Amar Babu. The company's market share in India has grown to 10%, reports research agency IDC.

Egged on by its government, Chinese companies and their representatives are flocking to what they say is a hugely untapped market. Chinese businesses are establishing offices. Factories in partnership with Chinese companies are sprouting. The Chinese are also developing and selling products under their own brands in India.

A lot of unregistered capital may also have flown into India, says Chinese Economic and Commercial Counsellor Peng Gang. "Some private people may have made very large investments."

Many large Chinese state-owned companies such as Sinosteel, Shougang International, Baoshan Iron & Steel, Sany Heavy Industry, Chongqing Lifan Industry, China Dongfang International and SinoHydro Corporation have won projects in power generation, machinery and infrastructure construction in India, according to Exim Bank data. There are also other Chinese electronics, IT and hardware companies such as TCL and Haier based in India. More from sectors as diverse as automobiles, technology and manufacturing are preparing to enter India, says Peng. "A lot of power equipment is imported from China. But these companies want to invest in India."

Strained Relations

A few years ago, even the most diehard optimists would not have wagered on the flux of Chinese businessmen entering India, given that the political ties were tinged with mistrust and ambiguity. India's defeat at Chinese hands rankles nearly five decades later. Deep differences persist over Pakistan and the border.

China is India's largest trading partner, but the tradition of stress and strain is also deeply ingrained in trade, which is lopsided heavily in China's favour. The trade deficit last year was about $16 billion in Beijing's favour, says government data.

Even so, the heady gains by Chinese firms and the swelling quantities of traded goods underscore profound shifts. Trade stalled but never fell even during a lull in ties. Bilateral trade actually grew 30-fold since 2000 to $61.7 billion in 2010. Peng says trade during the first four months of 2011 grew 20% to $23.6 billion from a year ago.

The influx of Chinese businessmen must be viewed in the context of the buoyancy in trade, says a foreign affairs ministry official. "We can no longer separate politics and economics," he said, asking not to be named. It heralds the return to a period in the 17th and 18th centuries when the two economies dictated global trade. "No one seems to remember that there was a time when India and China were friends," he says.

JNU's Acharya says there is a sharp increase in the interactions between the two sides, complemented by a high degree of flexibility. "Policies and strategies are clearly laid out, but with flexibility," she says, adding that the "contacts between Indian and Chinese businessmen reflect this flexibility".
Long List of Problems

That is not to say the relation is not fraught with friction. Security concerns continue to loom over the operations of Chinese telecom equipment makers. Huawei, for instance, is accused of being a front for the Chinese army, though the company says employees are the owners.

Then there is the restriction on visas, which Peng says is the No. 1 problem for Chinese companies. China Minmetals' Shi says there are a lot of documents and procedures involved in getting a visa. "And I have to repeat this every three months."

Indian corporate bosses who have forged tie-ups with the Chinese too are dismayed at the visa problem. "What is the advantage of holding back visas?" asks KK Modi, chairman of KK Modi Group, who is building a pesticide plant at Dahej in Gujarat partnering a Chinese company. "Conditions should be set in a strategic sector like defence, not in economic ties." Adds a former diplomat: "A bizarre belief runs in Indian security agencies that every Chinese entity is an extension of the state."

Peng says the visa problem is holding back Chinese investments in India. Total FDI of Chinese firms last year peaked to $258.8 billion, but only 1% was directed to India, he says.

Deepak Puri of Moser Baer, who has long done business with China, says India must look to its neighbour than the US or EU.

For their part, Chinese businessmen say they have learnt to live with the visa problem. "Now if only they would install ACs at the visa office," says ZTE's Liu.

ZTE too is familiar with Indian conditions. The company entered India in 1999, but won its first deal (from BSNL) only in 2002. Growth, says CEO Cui, has "slowed a little" due to the security issue. "But the market is still there. Last year, we made $1 billion despite the security issue."

This is the Chinese trait, says JNU's Acharya, "of finding their own ways to get around obstacles when they see opportunities". "They are highly professional."

Huawei officials say they have collaborated with the government to resolve the security issue. They have also heeded to the market's needs." India is a challenging market because Indians are looking for the best technology at the lowest cost," says Eric. "The best technology is expensive, but Indians won't listen."

The Chinese seem to always find ways to hammer out things. "For surviving, we understand what the market needs," says Eric.

There are other survival techniques while preparing for India. Liu carried Chinese condiments and an ample supply of medicines to India. Yao read many books before her trip. She took clothes as "my size is different". Her colleague Cai Piqing, who shops at Delhi's Select City Walk mall, can't dodge the size problem. "Most Chinese women are petite and Indian clothes are close to European size."

Some issues beat the Chinese. "Our projects should happen fast. But they don't. The reasons are ridiculous. Equipment from ports is stuck somewhere. We don't know why," says Eric.
Indianisation Complete
Like many of his peers, Eric has made peace with Indian ways. "Earlier, I was frustrated. Now I am used to it. I believe I've become like Indians. The people have tolerance here. People can accept if others are late."

The laidback nature of Indians has many takers among the Chinese. "I really appreciate that people enjoy life here than we do in China. People there have lots of pressure," says ZTE director Zhang Wen Cheng. "India maintains its traditional culture better than China."

Culture is a recurring theme in conversations with the Chinese. "We invited an Indian girl who studied Chinese in JNU to teach us Indian culture and Hindi. We learnt a lot of interesting stories of Hindu gods. We find Indian weddings interesting as they still follow hundreds of years of traditions," says Sinosteel's Chen.

India, the Chinese say, has had a profound impact on them, professionally and personally. "The biggest lesson I have learnt is I should put others' happiness over mine," says Eric, who recently presented 70 cycles to girl students at Farooqabad in Uttar Pradesh to mark the seven years he has been in India.

Eric says he understands Indian people and the market. "I don't just do business. I observe my colleagues, customers and the people. Today, I am able to deal with any organisation."

Liu echoes the same thoughts. "After India, I can take anything. I can work anywhere."

Still, China is far and India can get lonely.

"My wife is with me. That is very important. Else, I may have gone back," says Eric.

Some families do stay back home because of India's different education system. Shi's wife and daughter are in China. Liu says he is lucky because his kid is only a year old.

The loneliness explains why the Chinese in India are a tightly knit group. And also why they party every

Are the parties wild?

"They are quiet. We can't dance and swing to music like Indians," says Shi.

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