Journal : People's Daily (Chinese) Date : Author : Yuan Jirong Page No. : NA

Chinese enterprises set off a wave of investment in India

Last year’s investment amounted to 1.063 billion US dollars, more than six times of that in 2015

People’s Daily correspondent in India: Yuan Jirong

The first railway plant set up by China Railway Rolling Stock Corporation (CRRC) in South Asia started operations in India in August 2016. The picture shows Chinese and Indian workers in the production line of the CRRC railway factory in Bavo Industrial sector in India’s Haryana state.

Photo by People’s Daily correspondent Yuan Jirong

Recently, Tencent Holdings led the fourth round of investment amounting to 55 million US dollars in the Indian mobile healthcare company Practo, which is the latest progress of Chinese investment in India. Over the past year or two, China’s investment in India has shown a surge of momentum, with both the number of enterprises investing and the amount of investment rapidly increasing. Under push from a series of measures launched by the Indian government for improving the economy like “Make in India”, and using the driving force of China’s escalated economic transformation and vigorous promotion of international production capacity cooperation, the economic strategies of China and India— the two most populous nations— is increasingly being linked up.

Traditional industries grow steadily and surely

Driving along the expressway for about 20 km towards east from Ahmedabad city of India’s Gujarat state, there appears an open land filled with shrubs by the roadside. China Small and Medium Enterprise Industrial Park Development (India) Co., Ltd. General Manager Zhang Xiuge told this reporter that this is the future site for the China Small and Medium Enterprise Industrial Park. Currently transfer of the second batch of land for the industrial park has been completed as per schedule, and construction is expected to start by this year.

Industrial Park is a key project of “One Road One Belt” led by China Association of Small and Medium Enterprises (CASME), and the main company which is implementing the project is Medium and Small (Chengdu) Investment Management Co., Ltd. from Chengdu. The project started in June 2016, and has a planned area of ​​5 square kilometers, with a total investment of 1.4 billion US dollars. The first phase is expected to be operational by 2018, and after all the enterprises are settled, the park will create an annual output value of 5 billion US dollars. Zhang Xiuge said that currently the number of enterprises wanting to move into the park has reached more than 100.

Further moving ahead along this expressway for over 10 kilometers, is the place where HIGLY Electrical Appliances India Pvt. Ltd. and Baosteel India Co., Ltd. are located. Shanghai Highly (Group) Co., Ltd. Chairman Shen Jianfang told this reporter that the fourth phase of Highly India’s plant was completed by the end of 2016, and the total investment for the four phases adds up to 71.8 million US dollars, forming a production capacity of 2 million air-conditioning compressors per year. Baosteel India Co., Ltd. Deputy General Manager Li Lili told this reporter that Baosteel India Co., Ltd. is the first wholly-owned factory set up overseas by Baosteel, with a total investment of 40 million US dollars. The plant was officially operational by January 1, 2016, and has an annual production capacity of 150,000 tons.

At present, China’s investment in India’s manufacturing sectors like power, steel and energy, as well as infrastructure sector shows a steady and sure situation. At the beginning of 2016, Dalian Wanda announced that it would build an industrial zone in India’s northern state of Haryana with an estimated cost of $ 10 billion. China’s construction machinery manufacturer Sany Heavy Industry Co., Ltd. announced its plans for investing 1 billion US dollars in India within the next 10 years. The Chinese Industrial Park in Vadodara city of Gujarat is principally engaged in the production of electrical power machinery, and was constructed by TBEA Energy (India) Co., Ltd. with an estimated investment of US $ 1 billion.

“India has already reached a consensus on upgrading the Chennai – Bangalore – Mysore railway to a high-speed track, and it will be accomplished by a Chinese company. After the upgrading, travel time between Chennai and Mysore will be reduced by 2 to 3 hours. This will not only greatly optimize the personnel and material flow between the three cities, but also is conducive to promoting economic integration, promoting local economic growth,” said Mr. Kumar, executive director of Indian Railways Planning Committee, to this reporter. According to him, India’s investment in the railways will be more than 60 billion US dollars in the next five years, which holds great opportunities for China.

Emerging industries open up vigorously

When Xiaomi entered India in 2014, initially they had only three people; but within a short span of just three years it has grown to more than 150 people. Xiaomi mobile phones now account for 7% of India’s market share. In 2016 Xiaomi achieved an explosive growth in India, pushing it to among the top three positions in the market with annual sales volume crossing 1 billion US dollars. Xiaomi India general manager Manu Jain told excitedly to this reporter that in 2014, the Indian people knew nothing about Xiaomi, but today it has become the main choice of  business elite in India. Xiaomi has invested 25 million US dollars in India to set up mobile phone factories, and in last year August it has announced to build two more factories.

The rapid rise of Xiaomi in the Indian market is a depiction of China’s emerging industries, represented by mobile phone and the Internet companies, capturing the Indian market. Indian Council for Research on International Economic Relations researcher Mr Khan told this reporter that the huge young population, the potential of the Internet and other emerging markets and the similarities between national conditions of China and India are attracting China’s emerging industries to expand in India.

According to a report in India’s Economic Times, Huawei has announced partnering with Indian electronics manufacturer Flextronics for the production of smartphones, and is expected to achieve the target of manufacturing 3 million phones by the end of 2017. Huawei has also set up the largest global service centre and a new R&D centre in Bangalore, India. The report says that this is yet another Chinese mobile phone industry manufacturing phones in India. Last year, Chinese mobile phone company Gionee announced an investment of 500 million RMB in India to set up mobile phone factories.

China’s e-commerce companies have also trained their sights on India. Economic Times recently reported that China’s e-commerce giant Alibaba intends to add an investment of 200 million US dollars in India’s e-commerce company Paytm. Before this, Alibaba and Ant Financial have already invested $ 680 million in India. Tencent Holdings led a funding in the Indian chat App Hike, Baidu is discussing investment in an Indian start-up e-commerce company … … According to a recent report in the online version of the US magazine Forbes, from 2000 to March 2016, the cumulative investment by China’s Internet companies in Indian start-ups amounts to about $ 1.35 billion, and by the end of 2016, the amount of investment has increased to $ 2.3 billion.

  The investment model is more flexible

Economic and Commercial Counsellor of Chinese Embassy in India Li Baijun told this reporter that India has already become a favourite destination of investment for a lot of Chinese enterprises in their pursuit to expand abroad. Relevant data show that among China’s investment in major economies, India has already become number one as far as the growth rate is concerned. In 2016, China’s investment in India was as high as $ 1.063 billion, which was more than six times that of 2015. By the end of 2016, the cumulative direct investment of China in India has crossed 4.8 billion US dollars, but before 2014, this amount was only about 2.4 billion US dollars.

China’s investment model for India is more flexible and diverse. In addition to direct investments, mergers & acquisitions and capital increase have become new models of China’s investment in India. “In the past two years, Chinese companies have been speeding up their action of acquisition and funding of Indian companies,” said the Director of Indian Mergers & Acquisitions Consulting Firm Kasina (Chinese phonetic transcription) to this reporter. Industrial and Commercial Bank of China (ICBC)  Mumbai branch has set up a special group for mergers and acquisitions in 2015 to help Chinese enterprises in their increasingly active mergers and acquisitions business. The number of Chinese enterprise investing in India has rapidly grown to several hundreds. Among them private enterprises are showing great vitality due to their advantages like small size, adaptability and flexibility of funds.

Mr Khan believes that the Indian market has good prospects, and factors like the Government’s efforts to improve the business environment are one of the major reasons for the rush of Chinese investments in India in the past two years. Li Baijun believes that China and India have a good external environment for cooperation, and India welcomes Chinese enterprises to invest and prosper in India. The Chinese government also encourages and supports Chinese enterprises to invest and flourish in India, and launching of large cooperative projects have provided a huge investment space for Chinese enterprises.
(People’s Daily, New Delhi, February 14)

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