Indian nationalist uproar provoking market animosity for Chinese businesses
In just a year India has turned from a market darling to a risky land in the eyes of many Chinese investors.
In 2019, Chinese tech investors praised India as the “Next 1 billion market” that will emulate China’s mobile internet success. Realme, a smartphone brand, rose to stardom from relatively humble beginnings by striking a delicate balance that guarantees high performance smartphones at affordable costs for Indian consumers.
In the three years since 2017, Chinese investment in India totaled $10 billion.
However, experts said the COVID-19 pandemic and recent diplomatic ruptures are changing relations for the worse. The Indian government’s closure of its border after the epidemic outbreak in China crippled business exchanges. Then India itself entered lockdown with halted supply chains that crippled the operations of many Chinese companies. The fatal border clash on June 15 between Indian and Chinese troops has since further deteriorated bilateral relations.
Amid a high tide of jingoism targeting China, the Indian government carried out moves damaging the confidence of Chinese investors and blemishing its status as a worthy investment destination for foreign companies.
In just two weeks’ time, the Indian policymakers at national and regional levels have paused key project proposals of automotive projects, vowed to replace contractors for its railway signaling upgrade project –the single largest Chinese deal in the country, delayed customs clearance for goods from China, threatened to slap tariffs on Chinese solar panel imports, and moved on Monday night to ban a total of 59 apps of Chinese origin, including the hugely popular TikTok and UC Browser, on “national security” grounds.
The moves are so swift and in contrast to India’s notoriously low efficiency in facilitating investment procedures that some Chinese observers term the process as an “Incredible India” moment.
“Right now, the majority of Chinese working in India want to go home for their safety due to the COVID-19 pandemic which seems to be getting out of control in the country,” a top representative of the China Council for the Promotion of International Trade in India told the Global Times, summarizing the real-time thinking of the 20,000-strong Chinese business community in India.
Now that increasing investment this year or the next is off the table, some Chinese companies and investors express uncertainty about what to do in India next.
Shifting attention
For those Chinese firms that have been operating in India for years and have made deep footprints, the current situation has become a “big headache” for their next move.
“We cannot make predications based on the current foggy market outlook,” said head of a Chinese photovoltaic firm in India surnamed Wang.
Living in India for over a decade, Wang told the Global Times that his firm is faced with difficulty in making decisions about how to take the next move in India.
“We have received new orders despite the epidemic in India but meanwhile worry about whether we can deliver those orders in time,” Wang said.
Wang said the unworkable management of staff and business travel to India because of the restrictions on cross-border travel has also posed obstacles for the firm.
“We are also concerned about whether the supply chain in India could be guaranteed with the temporary resumption of logistics. We don’t know if there will be more shutdowns someday if cases spike.”
India risks becoming the next epicenter of the pandemic, with more than 540,000 confirmed cases as of press time, and the government of Maharashtra state on Monday extended the lockdown in the state till July 31 amid a steady rise in the COVID-19 cases.
If more states follow suit to extend the lockdown, it will be disastrous for the recovery of the hard-hit Indian economy. And it is exactly due to the impacted economy that the Indian government keeps shifting public focus via fanning the anti-China sentiment, according to Wang.
“Such a makeshift ploy could only take effect for a short period, yet won’t help to save India’s already fragile economy,” he added.
Analysts and investors active in the Indian market for years told the Global Times that new entrants into the Indian market, who a few months ago had been hoping to invest in India, now have their confidence heavily battered.
Sha Jun, executive partner at the India Investment Services Center of the Yingke Law Firm, told the Global Times only around 20-30 percent of Chinese firms operating in India invest in large scale and heavy assets in India, while the vast majority are filled up with small investors with light assets.
The Indian government keeps shifting public focus from its stalled economy via fanning anti-China sentiment, but such a makeshift ploy won’t help to save India’s already fragile economy as Chinese investment pulls from the country.