Home > Business > Business Headline > Report

Where are the Chinese goods?

BS Corporate Bureau | August 09, 2003 09:23 IST

In the year 2000, Indian motorcycle makers were a worried lot. A number of them had announced plans to launch dirt-cheap Chinese bikes, fearing that such dumped motorcycles would swamp the Indian market.

Today, the fear of Chinese motorcycles no longer stalks manufacturers. "I don't think the Chinese are interested in the Indian market now," says Atul Sobti, vice-president (marketing), Hero Honda Motors Ltd.

Only one company, Monto Motors, launched Chinese motorcycles in the country. In a market, which sells over 2.5 million units a year, the firm claims to have sold around 15,000 bikes so far.

Three years after the threat was realised, Chinese imports have failed to make a dent in segments like two-wheelers, automobile components, tyres, consumer electronics and computers.

The Confederation of Indian Industry and Federation of Indian Chamber of Commerce and Industry, which had lobbied vigorously to block the onslaught, say dumping by China is no longer an issue.

But how did the miracle take place?

To begin with, Indians beat the Chinese at their game of aggressive pricing. Three years ago, the entry-level price of Indian motorcycles was Rs 31,000, and there was talk of Chinese motorcycles being launched at Rs 25,000.

Since then, Indian firms have brought down the entry-level price to Rs 26,000. Monto's Chinese bike, the Cosmo Blaster, in contrast, is available for Rs 30,000.

Videocon chairman V N Dhoot says he has been exporting 21-inch televisions for as less as $68, while the Chinese price is $78.

Dhoot and other Indian producers did face an initial challenge from Chinese brands like Konka and TCL, but these names failed to make headway.

Says R K Caprihan, chief executive of Kelon Corporation, which imports products from China to sell under its own brand name: "Chinese firms did not succeed in India because they did not understand the market. Televisions may be slightly cheaper in China, but this differential alone does not justify doing business in India."

In the case of automobile components as well, Indian companies have attained the critical mass to match Chinese prices.

Leading automobile companies like Bajaj Auto and LML had scouted the Chinese industry to source components but could not find anything worthwhile.

Far from being annihilated by China, Indian manufacturers currently hold potential export orders worth $10 billion.

Interestingly, Bajaj Auto now plans to produce a bike in China, with components supplied from India.

"The Chinese are delighted with our quality and price," Bajaj Auto vice-president (business development and marketing) R L Ravichandran said.

Moreover, the Chinese could not deliver quality products. According to Pankaj Gupta, director of the Society of Indian Automobile Manufacturers, Chinese products failed because of India's stricter emission norms.

"Their problem was that if they complied with Indian norms, they lost their cost advantage," Gupta said.

"I have heard they are now more keen to sell engines. But even that may be difficult because of our emission norms," Sobti pointed out.

"We had considered getting a Chinese brand to India. But we later realised that these products may not be of good quality. Indian standards in consumer electronics have been defined by the Japanese, who came in earlier," Dhoot said.

The same goes for tyres. Industry players say Chinese truck tyres did surface at 10-12 per cent cheaper prices but sales figures were never significant.

"Chinese tyres cannot succeed in India because of the difficult road conditions," Apollo Tyres cOnkar Singh Kanwar explained.

On average, the life expectancy of a Chinese tyre is at least 20 per cent less than its Indian counterpart. With almost 75 per cent of Indian trucks being owner-driven, Chinese tyres did not go down well with these value-for-money customers.

Also, the market for certain products in India is not yet large enough. Take computers, for instance. While China sold 40 million personal computers in 2002-03, India sold 2.3 million.

"Fears that Indian manufacturers of computer hardware will be hit by cheap Chinese imports seem to have receded now," says Vinnie Mehta, executive director of the Manufacturer's Association for Information Technology.

However, Chinese products have come to dominate the lower end of the product spectrum, in segments like toys and electrical accessories.

A walk down New Delhi's Karolbagh market reveals that Chinese toys are selling more than Indian brands. Shopkeepers disclosed they had stopped stocking Indian-made toys.

The price of a battery-operated Chinese car has fallen from Rs 300 two years ago to Rs 60. The fall in prices has caught the fancy of low-income families.

The sale of Chinese batteries, torches and accessories, like earphones and speakers, have also seen a 25-30 per cent sales growth in the past year. But here too, retailers say, the craze for Chinese products is on the decline.

Article Tools

Email this Article

Printer-Friendly Format

Letter to the Editor

People Who Read This Also Read

Forex reserves dip $204mn

Tata Motors eyes 15% growth

Sebi sees 7% GDP growth in FY04

Powered by

Copyright © 2003 rediff.com India Limited. All Rights Reserved.