INFOCUS|INDIA|INTERVIEW
“Silk Route will be a
Game Changer” Mr. Ravi Bhoothalingam, Chairman of Manas Advisory, an executive coaching firm and business consultancy service for Indian and Chinese companies, shares with Urmila Rao, his views on the unique challenges that the two neighbours face in boosting their economic relationship. It ranges from lack of language translators to complex tax rules and the familiar terrain of political mistrust that sets back economic ties. Mr. Bhoothalingam, an Honorary Fellow of the Institute of Chinese Studies, India, shares more views.
Q: Chinese companies are moving up the innovation ladder, adopting sophisticated technologies and becoming less of a manufacturing hub. In addition, minimum wages are rising. In this background, would 2015 be the end of the ‘Made in China’ era? A: No, 2015 will certainly not be the
end of the ‘Made in China’ era. It is true that wages in China, especially in the eastern seaboard, are rising rapidly. There is also a strong move by the Government to upgrade the level of Chinese industry to become more value-additive through modernisation, R&D and innovation. However, these moves will take considerable time to work their way through the system. Some of the manufacturing units where
|32| India-China Chronicle January–February 2015
China is too costly have already moved to inland provinces of China or to Vietnam, Cambodia, etc. But wages in central and western provinces of China are still low, and the manufacturing being relocated there will remain competitive for several years, especially since Chinese infrastructure and transportation logistics is excellent.
Q: In the latest World Bank report ‘Ease of Doing Business’, ranked on several indicators, China sits at 90th position, compared to India which is on 142th position. What is your view with respect to difficulties faced by Chinese firms while starting a business in India and vice-versa? A: These reports usually are written
with a Western perspective and often
do not reflect what difficulties Indian businessmen actually face in China, or vice versa, which are quite unique. For example, Chinese businesses face problems with the Indian bureaucracy in obtaining visas, especially for research or academic personnel. Amongst our officials, there tends to be an atmosphere of suspicion regarding Chinese investment proposals. In addition, the Chinese are unfamiliar with the problems and lack of reliability of Indian electricity supply and delays in logistics and difficult cross-province transport of goods due to complex tax rules. Equally, Indian businesses find it difficult to deal with the often nontransparent and vague Chinese rules and regulations at the central and provincial levels. Perhaps the biggest problem is the unfamiliar language and the huge lack of Chineselanguage translators and interpreters available within India for the use of travelling Indian businessmen. This leads to Indian business people being unable to deeply understand the Chinese market and consumer trends and therefore to create products for it, or to hire Chinese people who can do this for them. If this had been done better, we would not have such a large trade deficit with China. In contrast, Chinese businesses are even making and selling images of Indian Gods for every conceivable festival in India!
attempt to delink the political and economic issues and to improve trade and investment ties with China. India needs massive investment in infrastructure and China has both the funds and the expertise to invest in these areas. This can only be beneficial to India’s economy and ultimately for income and employment generation in India, which is after all the Government’s goal of ‘vikas’.
Q: There is an increased focus on reviving the ancient silk corridors in Bangladesh, China, India and Myanmar (BCIM) to boost trade and investment. How are SinoIndian companies reacting to this development? Will it turn out be a
Q: To what extent does the issue of border mistrust cause an adverse impact on trade relations? A: These issues definitely cast a pall
on Sino-Indian economic relations, since they condition the bureaucracy in India to be wary of Chinese investment and of its citizens. But even with the border issues existing as they do today, I cannot see why trade and investment cannot be improved considerably. After all, China has excellent and extensive trade, investment, tourism and educational relations with Japan, Vietnam and Taiwan, though all of them have serious political issues with China. India should certainly
Comprehensive eConomiC engagement with China in goods, serviCes, investment, student exChanges and tourism will aCCelerate india’s development. after all, it is inherent eConomiC strength that lies at the heart of seCurity
game-changer in increasing trade across border regions? A: The silk routes and corridors
are definitely a game changer, as they will vastly improve the ability to trade and transport goods, services, ideas and people across the many countries of Central, South, South-east and East Asia. Indian companies must, of course, plan to benefit from these developments but whether they actually do so is dependent on the Indian Government’s view of India’s participation in these initiatives. As of now, that view is not clear, and I do hope that this is not another bus that India will miss.
Q: With PM Mr. Modi going aggressive on the foreign policy/ diplomatic forefront, how do you see economic relations between the two countries panning out in 2015 in relation to other countries in the Asia-Pacific region. A: The Prime Minister has started
with bold and imaginative initiatives with regard to our neighbours, but on the China front, a clear policy is yet to emerge. India has reacted very cautiously to the Chinese invitation to India to join the Maritime Silk Road, for example. It seems that fears of economic domination by China and/or security concerns (or both) are playing a somewhat excessive role in creating such an attitude of caution if not reluctance. But on the contrary, India has many cards to play where Indian companies and the Indian people can benefit by being linked more closely to the markets and production centres across all of Asia. India must of course strengthen its own economic capabilities, but whilst doing so must follow a planned approach to integrate itself within an increasingly inter-linked and fast-growing Asia. Failure to do so will mean that in years to come we will find that our neighbours might have outpaced us in many ways. Development and security must go hand in hand.
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