IMPACT OF CHINESE GOODS ON INDIAN MARKET

INDEX Made in China, sold in India 4

There seems to be no way to escape the 5 DRAGON!!!

Why are chinese products priced so cheap?

Chinese goods: boon or bane ?

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ACKNOWLEDGEMENT We would sincerely like to thank Prof. ANIL MISHRA SIR for providing us an opportunity to explore such wonderful topic and broaden our knowledge. It would have not been possible to learn this topic without maam supporting us.

SYNOPSIS
Introduction MADE IN CHINA the label has caused a sense of fear and anxiety among the Indian business houses. China opening up and operating on socialist market economy principles is a tough and competitive China; a dragon which is all set to sweep the world markets with its various goods, goods which are of good quality and are surprisingly priced at a low rate, which is something that baffles the world community. The low rate comes due to the fact that the Chinese Government lends a subsidy ranging from 30 per cent to 100 per cent. The Chinese made goods, of better quality and low rate, have flooded the Indian market in hordes encompassing all types of products chocolates, toys, garments, computer hardware, and so on, and are finding ready and eager takers among the Indian consumers and this is the factor which has caused a great sense of uneasiness among the Indian industry community.

Ten years ago, it was unthinkable to compare China with India. The emergence of India and China as major global players heralds new realities. Both countries have transformed the global political architecture increasingly shifting power from West to the East. The question issue here is the nature of the India's economic growth and its potentials to outperform China. To-day India has become the world's most debating chamber before economists and entrepreneurs like you, it is not without a reason it is an exiting love-affair with growing passion which reminds us all that rise of India means that democracy can be good for growth. It also poses a question that can an Indian political model based on democracy and rule of law can overtake rival Chinese political model of unbridled government authority as a formula for making poor countries rich. India's economic dynamism constitutes a huge paradox comprising achievements and failures simultaneously. Economic reforms in India over the last few years in particular are promising but not sufficient. India may claim that there is no other country in the world

which is so productive and that India's pluralistic system is in fact strength rather than a weakness, it is not too convincing given the slow pace of development. India may claim that because of the democratic system it has fallen behind China in terms of both FDI and growth rates, but in fact a lot of problems being experienced in India are not because of democracy but because of bureaucracy, controls and restraints in establishing enterprise and barriers in the way of entrepreneurship and lack of effective governance. Two years ago the view that India might have a more competitive economy than China was met with incredulity. To-day comparison of the two countries offers valuable insights for us for the global economy. A fundamental distinction is that China's growth stems from resource accumulation while India's is rooted in increasing efficiency. In the last decade, India has emerged next to China in their growth rate. Empowered by engine from IT, and exporting its manpower throughout the world that has increased the credibility of India, and made it an economic powerhouse for the 21st Century; and it has shown that it has all the guts to be in that ceremonious position. Made in China, Sold in India With the world turning into a global village and competition getting stiff, countries like China are ruling the roost in many a market in varied spheres. India is the hub of diverse business opportunities, and slowly yet steadily, Chinese products like electronics, crackers, idols, apparels,etc.are predominating similar Indian products.

The festive season is the season of business especially filling the pockets of traders. But instead of the domestic sector holding sway over the market, the opportunities are grabbed by Chinese manufacturers with their variety of exquisite products. Whether it is SMEs ( Small and Medium Enterprises) or cottage industries, they are not able to provide a stiff competition to the cost effective offers provided by the Chinese. Due to these relentless import of Chinese products, most Indian cottage industries have closed down, and the future of the existing ones looks very bleak.

The Chinese entrepreneurs have infiltrated the market in a very systematic manner with their well-planned marketing strategies and continuous innovations. They study the demand patterns and the market trends and work out the lowest price that they can offer to attract a huge section of the consumers while still maintaining a profitable margin. As the Indian market is price-oriented, the domestic players are slowly losing their share to the strategic

Chinese

entrepreneurs.

Chinese electronic goods like radio, torch, DVD players, etc. are reigning supreme in the Indian market. Decorative items, fashion accessories like slippers, jewelleries, hand bags, etc. receive huge responses during festive seasons. This year, one saw the flooding of the Indian markets with Chinese made idols which were welcomed with open arms by the Indian consumers. Commenting on the change of the market scenario, Mr. S.P Agarwal, President of Delhi Exporters Association, said, "Chinese manufacturers have created a big problem for the Indian manufacturers. Especially the cottage sector which produces goods like handicrafts, decorative items, gift articles, idols etc. has been drastically affected, by the dominance of Chinese products in the market. This has raised a question mark against the various marketing policies that the Indian Government is making." There seems to be no way to escape the DRAGON!!! Yes, the Chinese goods have invaded almost all the sectors of Indian market and seem to be bringing tougher times for the Indian Industry. The rise in demand and sudden popularity of Chinese products, which are available at cheaper prices, is giving nightmares to the Indian industry to the extent that they have started sticking Made in China stickers on their products to boost their sales. Chinese manufacturing units produce goods on a large scale. They are using the big Indian market merely to dump their products and by doing so they are killing the Indian units. For example last year during Diwali, China made crackers were sold in the Indian market. These crackers reportedly contained Sulphur. Sulphur is more harmful than Nitrate, which is used in India to make crackers. Since the Chinese crackers were cheaper than the Indian crackers, so they managed to attract gullible and largely illiterate Indian lot. As a result the Indian cracker industry saw a decline in the revenue. China is our major competitor in sectors like software, hardware, electronics etc. We should not allow China to dump their excess produce here. The small-scale industry (SSI) contributes 35-40 per cent to the total manufacturing in India. So it is the SSI, which suffers most because of Chinese goods. Many small-scale Indian companies have stopped manufacturing their own goods as now they import them from China. Thats why many Indian workers have lost their jobs.

It is the high time that our political leaders change their mindset and bring about the right kind of reforms without losing precious time in endless discussions. We must take necessary steps so that we do not fall prey to the DRAGONs designs of capturing a major share of our growth, which could prove to be a setback for our economy in the future. Everytime You Buy A Product...

...make sure that you are not buying a product 'Made In China'. Many may wonder why one should not buy an affordable and attractive Chinese product which is easily available in any Indian shop. The reasons are many: 'One-hour technology' products from China started entering Indian households some years ago. Even though the majority of these products did not succeed in the Indian market due to their 'inferior' quality, the Chinese 'invasion' of our market is still continuing. The dumping of Chinese-made fans, locks, watches, bicycles, radios, batteries etc is slowly replacing our own products and has become a threat to Indian industry. China herself is one of the victims of the counterfeit products they produce; in the year 2001, fake and low-quality medicines produced in China killed about 192,000 people. The Indian toy industry has been more or less wiped out due to the dumping of cheap Chinese toys. 'Made In China' can be classified into three categories: 1. Products Made in Forced Labour Camps 2. Products Manufactured by the Chinese Military 3. Products Manufactured by the Disenfranchised Labour Force. Business is everything! In 1998, the New York police busted a racket of some senior Chinese officials involved in the sale of the organs of executed prisoners for transplantation. It is estimated that more than one crore people work in thousands of forced labour camps across China. This includes a big majority of 'political' prisoners. China tops the world with more than 2,300 executions per year. Most of the executions take place in front of crowds inside

sports stadiums or public squares in the most preferred way -- 'a bullet to the back of the head,' because it does not contaminate the prisoners' organs with poisonous chemicals, as lethal injections do. Remember that every time you buy a product 'Made In China,' you are funding and empowering a brutal regime. We request you to boycott Chinese goods to save and protect the Indian industry and also to help end injustice and oppression in Tibet. Spread the word. Take a pledge that you will not buy, use or sell any product 'Made in China'. Why are the Chinese goods priced so cheap? The cost of production being less in China is an obvious answer but when we dwell deeper into the world of Chinese manufacturing, the reasons abound. Chinese goods are known for their moderate quality, prompt delivery and affordable prices in comparison to Indian goods. Following are some of the reasons behind Chinese goods being cheaper than Indian goods: 1. China does not have stringent intellectual property rights (IPR) issues so come any new product in the world market; China is ready with a cheaper alternate. Thus there is no cost of research, designing and redesigning of any product. 2. The labor is not demanding and does not go on strike. 3. Where most Indian companies are striving for a Total Process Review (TPR) for quality satisfaction, Chinese companies are not so particular. 4. China does not have any after sales tax on its products leading to a further lowering of costs. 5. The cheap Chinese labor is another major reason for the dirt cheap Chinese goods especially like toys where intensive labor techniques are employed. 6. Lower rate of Indirect taxes on Inputs. 7. High level of cash subsidies being offered by the Chinese government to its producers and exporters. 8. Lower taxes enable the Chinese companies to participate in the world market at a lower margin and thus dominate it. Adopt the business model focused on higher volumes is a natural progression in this scenario.

Chinese goods: Boon or bane?

The recent flooding of Chinese goods into the Indian market has raised a hue and cry, and the question whether we should accept this silently. From the narrow viewpoint of the average consumer, sufficiently satisfactory quality goods are available at roc k-bottom prices. For instance, the prices of China-made compact fluorescent lamps are less than the prices of lamps of well-established Indian brands, and of comparable quality. Now the Indian consumer is smart enough. There are issues of low quality Chinese products, It all depends on whatever the importer wants to import from China. They ask them to produce low cost products, which China produces for its buyers in India. The same country (China) is also supplying to US market where the consumer is quite quality conscious. So it depends on the buyers' demands. If the Indian buyers are asking for cheap products than China is producing these products for them." "In China the same kind of pen can be bought in $10 and also for $1. If you say I would like to buy the pen of $1, accordingly he will use materials different from what he uses in the $ 10 pen," he added. If experts are to be believed, almost all organized retailers are reporting a growth in Chinese imports. According to sources, in a global economy, it is inevitable that Indian products will find markets abroad and foreign goods will be sold in India. But the million-dollar question is: Why would Indians go to China if Indian manufacturers can give them the same or better product quality, much safer, more variety and price? There are some experts who are of the opinion that competitive products from China and other countries are benefiting Indian consumers and therefore India Inc. should have no objection to it. Point to be noted here is that only top quality Chinese products are gaining market share in India, not the shoddy ones. It is worth mentioning in this regard that Chinese consumer electronics are not selling in India.

It's a good possibility that in the next two or three years, some Indian industries will succumb to competition from imported goods, but large chunk of Indian manufacturers will pull up their socks and compete hard. No one will argue with the fact that organized retail has started a process of discovery for Indian manufacturers. As a matter of fact, they are finding their own strengths. In addition, they are preparing to give a fitting response to imported goods. In theory, Chinese products are winning only in categories where Indian industry has failed to provide top quality products at competitive prices. India needs to step up and start promoting India products as a sfaer alternative to China. All in all, one can safely say that Indian manufacturers will have to shape up; or they will get edged out of their home market in few product categories.