China tempts Indian consumers with cheaper goods
Saturday, 16 November 2002, 08:00 Hrs
NEW DELHI: Tang Shuli of China's two-wheeler maker Zongshen Group cannot hide his joy seeing the crowds besiege his stall at an annual trade fair here. "I am very surprised. Our three officials are finding it difficult to handle all the queries about our products," said a beaming Shuli in laboured English even as he greeted prospective Indian business partners. "Many people offer to buy motorcycles showcased here. We have to repeatedly tell them that these are only for exhibition," he said, pointing to a banner on top of the stall that says: Not For Sale. Shuli is not only to Chinese to express such sentiments at the two-week India International Trade Fair (IITF) that opened on Thursday in the sprawling Pragati Maidan complex here. Some 130 top Chinese companies, which are showcasing products ranging from pharmaceutical to toys and leather and electronic goods in the country's biggest trade fair, are the cynosure of all eyes. Around 400 companies from 25 countries, including Brazil, Chile, China, Iraq, Iran, Malaysia, Tunisia and the United Arab Emirates (UAE) are among some 2,000 participants at the 22nd edition of the fair. Chinese firms account for the largest number of overseas participants. In recent years, Chinese companies have been flooding the Indian market with cheap television sets, toys and other products, putting pressure on domestic manufacturers. Significantly, it's not just the allurement of foreign goods that makes the Chinese products special. Rather, it's their comparatively lower pricing strategy and better product features that have helped Beijing to take a tight grip of the price-sensitive Indian consumer goods market. Sample the figures. A 100 cc Chinese motorbike is up for grabs for anything between 20,000 to 35,000, while its Indian version with a similar engine capacity comes with a price tag of at least 30,000. A pack of four Chinese batteries will cost you as little as 10 whereas one battery in the domestic market will set you back by 8. Things are no different for ceramic items, shoes, apparel, toys, colour television sets, air-conditioners, refrigerators, packaged food products, home décor items, tape-recorders and kitchenware. "I know there are many two-wheeler companies in India who are doing good business and control large market share. But I think my company will be able to create its own market because of its price advantage," said Shuli of Zongshen Group. "At the same time, it would be wrong to say that we will take only the price advantage to compete with Indian companies. We are running a company, and like any other company we also think of profits. "We follow the same marketing rules all over world... There is no special strategy for India. Our prices are lower because the manufacturing cost in China is very low compared to other nations." Based in the industrial district of Chongqing, Zongshen Group exports automobiles to some 50 countries in Asia, Africa, Europe and the U.S. The firm is registered in 34 countries. Lifan Motorcycles, a part of the diversified Chongqing Lifan Industry, has already started to eat away profits of local motorcycles makers in small cities of India by introducing cheap and high quality bikes. It has grown from importing a few bikes from China and selling it here to appointing an Indian distributor and providing after-sale services in different parts of the country. "We have sold over 10,000 bikes in India in our first year of operation, and encouraged by the response of the products displayed here we will introduce four more models next year," said Yan Zhipu, deputy general manager Lifan group. It may be just a matter of time before the Chinese catch up with India in supplying spare parts and manufacturing techniques. Although the Indian industry is watching the Chinese companies spread their reach all over India with weary eyes, the winners are Indian consumers, for whom lower prices are a great attraction. "We don't care where goods come from if the price is right and the quality is good," said Reena Malhotra, a New Delhi-based housewife. Ranjan Chatterjee, executive director of the Indian Trade Promotion Organisation, the organiser, said Indian companies could no longer "wish away" the competition from China. "Indian companies should take this opportunity to benchmark themselves against their Chinese counterparts and improve their overall productivity," he said.