New Delhi, September 16 (CII): Dangal, Secret Superstar, Andhadhun and Bajrangi Bhaijaan are some of the highest grossing Indian films in China. Almost every big hit in India is released in China to cash in on the growing love for Indian movies in the country. But Bollywood film producers are not only ones charting plans for China. Indian companies operating in China also have growth plans to power their business aspirations in China.
According to the recently-released CII-Evalueserve survey on ‘Business Climate for Indian Companies in China’, 98% of the surveyed companies plan to make additional investments in China this year. Some of these companies have presence across the three broad industries: Manufacturing (40%), Services (48%), and Manufacturing & Services (12%). 22 companies (39%) plan to invest more in 2019 than they did in 2018. 11% (6) plan to increase investment by more than 20%. Of these, 5 have more than 75% Chinese employees.
The report also says that about 70% respondents are confident that their operations will be successful in the next 5 years. More than 80% of the respondents from sectors like Industrial Manufacturing, IT & BPO, Logistics, Consumer Goods, Telecommunications, and Chemicals are positive about their success in the Chinese market.
This is the second such survey in the series organised by CII’s Shanghai office and it drew responses on investments and operations from 57 Indian companies in China. The survey-based report provides an insight into the companies’ locations, business activities, investments and performance. While more than 50% companies started operating in China in the past 10 years, the 2005–2009 period saw the highest number of Indian companies starting their operations in China. 30% had generated revenue of more than RMB 100 million from China in 2018.
About 70% of the companies feel that quality of products and services continues to be a key success factor in China. As per the joint survey, four of five respondents stated that their revenues in 2018 were higher than that in the previous year.
However, there are challenges. While half the companies surveyed felt that China’s innovation is more favourable than the worldwide average, rising labour cost, finding and retaining talent and stricter regulations were the top issues quoted.
Even as China promises to address India’s concern over the ballooning trade deficit, 82% companies have rated strict and unclear regulations as the main concern. 72% feel that the macroeconomic policy adjustments are also a big concern. Obtaining required license (67%), and environment protection policies (60%) are some of the other areas of concern that Indian companies in the country are worried about.
The report says that the most popular destination for Indian companies in China is Shanghai with 72% of the surveyed Indian companies based out of the area. Beijing, Jiangsu and Guangdong are the other popular destinations in the country for India business houses.
India-China business travel has increased in the past few months for conferences, conventions and trade fairs. Apart from Beijing and Shanghai, more and more Indians are travelling frequently to cities like Guangzhou, Hangzhou, Shenzhen and Chengdu. In fact, recently IndiGo started daily non-stop flight to China on the Delhi–Chengdu route. Chengdu is located in the Sichuan province, and it is considered one of the busiest and fastest growing cities in China.
Even as the trade war between China and USA escalated with both countries levying additional tariffs, 74% of the companies surveyed said that trade friction involving China and the US has had no impact on their business. 40% respondents from Healthcare, IT&BPO, and Consumer Goods companies said that their 2018 revenue was substantially higher (>10% vs. 2017) and 57% companies involved in both Manufacturing and Services said that their revenue was substantially higher (>10% vs. 2017). The current trade trends present an unforeseen but hard-to-miss opportunity for Indian companies in China as well as for companies who are not yet in China and have been eyeing the market as part of their global strategy.