Beware, the Chinese are coming!

Riding on a booming economy even in a world of downturns and war clouds, the Chinese electronic industry is eyeing India as its next destination to outsource components and finished goods for expanding its global market share.

With political, economic and cultural relations between India and China on rebound, the Chinese manufacturing sector is keen on investing in India to set up either subsidiaries or joint ventures in the hardware sector, which in turn, could bail out the fledgling Indian electronic sector in the current decade.

As a sign of their determination to target India for marketing their goods and entering into collaborations with their Indian counterparts in the hardware segment, about 50 companies from Mainland China and Taiwan have descended in Bangalore this week to participate in ComponexelectronicIndia2003, the four-day annual international expo-cum-conference on electronic components, materials, and production equipment.

China National Electronics Import & Export Corporation deputy chief Zhan Tiebao told rediff.com in Bangalore on Thursday that the China was looking for greater interaction and participation with India to leverage upon their strengths in hardware and software segments respectively.

"India and China are not only the two largest countries in the Asian region with a combined population of over 2.5 billion, but are also endowed with skilled workforce and abundant natural resources. Globalisation and converging technologies are uniting countries and people the world over as never before.

"If India and China can jointly market their respective software and hardware skills and products, they will have a win-win situation in the emerging digital world. India is software giant as China is in hardware. Both the countries should take advantage of their strengths and mutually benefit," Zhang stated.

For instance, India exports about 70 per cent of its software to the US and Europe, while China exports about 90 per cent of its hardware goods to the western markets. But in turn the US exports 90 per cent of software to China, and 60 per cent of its hardware to India.

If India and China can come together, they can not only cater to the entire world, but also dominate their own domestic markets.

"China is ready to help build world class facilities in India to manufacture all kinds of electronics and consumer goods and enable India emerge as a hub for assembling lines and components. With increasing use of software from design and development in end-products, India will stand to gain a lot by emerging as a manufacturing hub of Asia on the lines of China, Taiwan, Japan, South Korea, and Malaysia," Zhang asserted.

Asked whether the Chinese industry has any timeframe for foraying into India, Zhang said India needed to open up more and improve its infrastructure to match the requirements of the Chinese entrepreneurs.

Though India is moving in the right direction so far as its import tariff and other taxation measures are concerned, a lot more needs to be done on labour reforms, single-window clearance and efficient transport sector, be it roads, sea ports, or airports for faster shipments and travel.

"Since India has agreed to reduce import tariffs on all IT and electronic products to zero duty by 2005, and bring about pro-active reforms in the industry on taxation and regulation fronts, we can certainly make an entry into India for setting up our own production units here or supply raw material to outsource our global requirements in components, embedded software, and electronic production services through contract manufacturing," Zhan affirmed.

According to Chinese Electronics & Information Industry Chamber of Commerce project manager Yuan Xull, India should have more Special Economic Zones and high technology zones so that Chinese enterprises and other overseas investors could set shop here as was being done in China over the years.

"India needs to have radical policies at the central, state and provincial levels, with flexible labour laws, exit policy and freedom to do business by anyone under local conditions as there is no dearth of skilled workforce and other resources," Yuan pointed out.

Referring to the phenomenal growth of the electronic industry in Mainland China, Yuan said production was estimated to grow up to $111 billion by the end of 2002 from $53 billion in 2001.