China still has a better, more open business environment: expert
It is easier to do business in China than in India, but the latter offers more business opportunities due to its fairly fast growth rate, experts told the Global Times on Thursday.
Sumeet Chander, general manager of Evalueserve Business Consulting (Shanghai) Corp, who is from India, said the slowdown in the Chinese economy, along with the rapid growth of the Indian economy, has impacted companies from both countries and shaped their plans for growth and investment.
“The business climate in China has become tougher during the past year. The growth is slowing. Companies in India, now, are looking at China more as a potential source of investment,” Chander told the Global Times on Thursday.
“In addition to Indian firms thinking about getting Chinese investors into India, there are also a lot of Chinese companies looking at investing in India, for instance, Alibaba and many online companies,” Chander said, noting that many Chinese firms are looking at India as the next big growth market.
In 2015, trade between China and India stood at $71.62 billion, up 1.4 percent year-on-year, according to the Ministry of Commerce (MOFCOM).
As of the end of 2015, outstanding investment volume by Chinese companies in India totaled $3.55 billion, while Indian firms invested $644 million in China, the MOFCOM data showed.
Also in 2015, Chinese non-financial direct investment to India reached $143 million, down 41.2 percent. Meanwhile, Indian investment to China reached $80.8 million, up 59.2 percent from the previous year, according to the MOFCOM.
India’s vast population, now estimated at 1.29 billion, is one of the reasons the country is attracting Chinese investment.
“Now there seems to be more Chinese firms going to India than vice versa. Fewer Indian firms are coming to China, especially in the last two years,” Li Qin, a Chinese legal counsel with the India-based law firm D.H. Law Associates, told the Global Times Thursday.
On September 23, Chinese telecoms giant Huawei Technologies Co said it would start making smartphones in India in October, a move aimed at profiting from the world’s third-biggest mobile market, according to Reuters.
The company got the green light from the Indian government in July, 19 months after applying for a license.
Upstart smartphone maker Xiaomi Inc started setting up plants in India in 2015.
International Data Corp has forecast that India would surpass the US in 2017 to become the world’s second-largest market for smartphones.
Ease versus opportunity
“It is still much easier to set up a firm in China, which has a better business environment, but India seem to offer a lot more opportunities for companies,” Chander said.
“The Indian government, while it is becoming a little more open to Chinese firms, it is not as open as the Chinese government is to Indian companies,” he said.
The concern for companies operating in China is that the Chinese economy is growing at a relatively slower rate so competition is up and more companies are competing for the same opportunities, according to Chander.
“American, German, Indian companies, they are all facing the same problem. Indian companies in the IT sector, for example, used to do great. But now Chinese firms are also doing well in that sector as they became more mature,” Chander said.
China’s GDP grew 6.9 percent in 2015 while India posted a 7.6 percent growth rate in the fiscal year ending in March 2016.