INTRODUCTION

MADE IN CHINA, SOLD IN INDIA: -

With the world turning into a global village and competition getting stiff,
countries like China are ruling the roost in many a market in varied spheres. India
is the hub of diverse business opportunities, and slowly yet steadily, Chinese
products like electronic, crackers, idols, apparels, etc. are predominating similar
Indian products.

The festive season is the season of business especially filling the pockets of
traders. But instead of the domestic sector holding sway over the market, the
opportunities are grabbed by Chinese manufacturers with their variety of
exquisite products. Whether it is SMEs (Small and Medium Enterprises) or cottage
industries, they are not able to provide a stiff competition to the cost-effective
offers provided by the Chinese. Due to these relentless import of Chinese
products, most Indian cottage industries have closed down, and the future of the
existing ones looks very bleak.

The Chinese entrepreneurs have infiltrated the market in a very systematic

manner with their well-planned marketing strategies and continuous innovations.
They

Study the demand patterns and the market trends and work out the lowest price
that they can offer a huge section of the consumers while still maintaining a
profitable margin. As the Indian market is price-oriented, the domestic players are
slowly losing their share to the strategic Chinese entrepreneurs.

Chinese electronic goods like radio, torch, DVD players, etc. are reigning supreme
in the Indian market. Decorative items, fashion accessories like slippers, jewelries,
hand bags, etc. receive huge responses during festive seasons. This year, one saw
the flooding of the Indian markets with Chinese made idols which were welcomed
with open arms by the Indian consumers.
Commenting on the change of the market scenario, Mr. S.P Agarwal, President of
Delhi Exporters Association, said, "Chinese manufacturers have created a big
problem for the Indian manufacturers. Especially the cottage sector which
produces goods like handicrafts, decorative items, gift articles, idols etc. has been
drastically affected, by the dominance of Chinese products in the market. This has
raised a question mark against the various marketing policies that the Indian
Government is making."

Even the entry of these products is questionable. According to Mr. Bikky Khosla,
“The need of the hour is to address whether the products are fully duty paid or
illegally imported to India. In the long run, with globalization and free trade
becoming the norm of trade, Indian SMEs need to buckle up and get ready to face
these challenges. No doubt SMEs have been affected, yet they need to be
educated on latest market trends and technologies. SMEs should be encouraged
and guided for the marketing of their products."

Adding to this, S.P. Agarwal said, "Indian SMEs should learn from China about
various marketing strategies undertaken by them. Rather than comparing the two
countries, the Government should first focus on its policies and work on the ways
to ensure that these products from China are heavily taxed so that the Indian
craftsmen's only livelihood don't get affected due to the unrestricted import of
Chinese made products."

The only way the above problem can be solved up to an extent is by introducing
SME favorable policies. The Indian Government should understand the basic fact
that SMEs are the backbone of Indian economy and their growth will in turn add
to the development of India. Indian SMEs should also continuously study the
market needs and come up with innovative and cost-effective products to tackle
the burning issue.
ECOMOMY OF INDIA
The economy of India is the tenth-largest in the world by nominal GDP and the
third-largest by purchasing power parity (PPP). The country is one of theG-20
major economies and a member of BRICS. On a per-capita-income basis, India
ranked141st by nominal GDPand130th by GDP (PPP)in 2012, according to the IMF.
India is the19th-largest exporter and the10th-largest importer in the world.
Economic growth rate slowed to around 5.0% for the 2012-13 fiscal years
compared with 6.2% in the previous fiscal. It is to be noted that India's GDP grew
by an astounding 9.3% in 2010-11. Thus, the growth rate has nearly halved in just
three years.

The independence-era Indian economy (from 1947 to 1991) was based on

admixed economic combining features of capitalism and socialism, resulting in an
inward-looking, interventionist policies and import-substituting economy that
failed to take advantage of the post-war expansion of trade. This model
contributed to widespread inefficiencies and corruption, and the failings of this
system were due largely to its poor implementation.

In 1991, India adopted liberal and free-market principles and liberalized its
economic to international trade under the guidance of Manmohan Singh, finance
minister from 30 November 2009 to 24 January 2010, and previously under the
leadership of P.V. Narasimha Rao, prime minister from 1991 to 1996, who hade
laminated License Raj, a pre- and post-British era mechanism of strict government
controls on setting up new industry. Following these major economic forms, and a
strong focus on developing national infrastructure such as the Golden
Quadrilateral project by Atal Bihari Vajpayee, prime minister, the country
economic growth progressed at a rapid pace, with relatively large increase in per-
capita income.
CHINESE GOODS IN INDIAN ECONOMY
Chinese goods on Indian economy.

There seems to be no way to escape the DRAGON!!! Chinese goods are using the
big Indian market merely to dump their products and by doing so they are killing
the Indian units. For example, last year during Diwali, China made crackers were
sold in the Indian market. These crackers reportedly contained Sulphur. Sulphur is
more harmful than Nitrate, which is used in India to make crackers? Since the
Chinese crackers were cheaper than the Indian crackers, so they managed to
attract innocent and largely illiterate Indian lot. As a result, the Indian cracker
industry saw a decline in the revenue. Because of cheaper prices products made
in Chinare becoming more popular among the Indian masses. This has had a very
negative effect on our own manufacturing units and as a result many of them
have had to shut shop. For instance, data reveals that 60 per cent of the industrial
units in the industrial belts of Thane and Bhiwandi near Mumbai have been closed
down (Indian cottage industries i.e. handicraft) Due to its cheap labor, China
offers low---

priced imports such as textiles and clothing, electronic devices, machinery, etc.
According to official data, Chinese imports stood at $3I9 million (Rs 1,435 crore)
during April-June this year as compared to $223 million (Rs 1000) crores during
goods in the foreign market as being cheaply produced.

DRAGON’s designs of capturing a major share …:

DRAGON‟s designs of capturing a major share … They are killing the economy of

not only India but also the economy of the whole world very slowly. They are
selling their cheap products on very cheap rates and we people are getting
addicted of these cheap rated things and after few years there will come a time
when you will see only the Chinese goods in the markets because all the other
manufacturers will become bankrupt and after that China will start to raise the
rates of their products i.e. there will be complete monopoly of China on the goods
market. That’s the policy on which China is working now days.
INDIA VS. CHINA ECONOMY
INDIA VS CHINA ECONOMY

Making a depth study and analysis of India vs. China economy seems to be a very
hard task. both India & China rank among the front runners of global economy &
are among the world’s most diverse nation. Both the countries were among the
most ancient civilizations and their economies are influenced by a number of
social, political, economic and other factors.

However, if we try to properly understand the various economic and market

trends and features of the two countries, we can make a comparison between
India and Chinese economy.

Going by the basic facts the economy of China is more developed than that of
India. while India is the 11 largest economies in terms of the exchange rates.
China occupies the 2position surpassing Japan. Compared to the estimated
$1.3123trillion GDP of India.

China has an average GDP of around $4909.28 billion in case of per capital GDP.
India lags far behind China with just $1124 compared to$7.518 of the latter. To
make a basic comparison of India and China economy. We need to have an idea of
the economic facts of the countries.
Facts India China

GDP Around$1.3123 Around

4909.28B

GDP growth 8.90% 9.60%

Per capital GDP $1124 $7,518

Infection 7.48% 5.1%

Labor Force 467 million 813.5m

Unemployment 9.4% 4.20%

Fiscal Deficit 5.5% 21.5%

Foreign Direct Investment $12.40 $9.7billon

Gold Reserve 15% 11%

Foreign exchange reserves $2.41 billion $2.65trillion

World Prosperity index 88Th Position 58th position

Mobile users 842 million 687.71million

Internet users 123.16millon 81millon

If we make the analysis of India vs. China economy. we can see that there are a
number of factors that has made China a better economy than India. First things
first, India was under the colonial rule of the British for around 190 years. This
drained the countries resources to a great extent and led to huge economic loss.
On the other hand, she was no such instance of colonization in China. As such,
from the very beginning the country enjoyed a planned economic model which
made stronger.
AGRICULTURE
Agriculture is another factor of economic comparison of India and China. It forms
a major economic sector in both the countries. However, the agriculture sector of
China is more developed than that of India. Unlike India, where farmers still use
the traditional and old methods of cultivation. The agriculture techniques used in
China are very much developed. This leads to better quality and high yield of
crops which can be exported.

IT/BPO
One of the sectors where India enjoys an upper hand over China is the IT/BPO
industry. India’s earning from the BPO sector alone in 2010 is $49.7 billion while
China earned $35.76 billion

LIBERALIZATION OF THE MARKET

In spite of being a socialist country, China started towards the liberalization of its
market economy much before India. This strengthened the economy to a great
extent. On the other hand, India was a little slow in embracing globalization and
open market economies.

CHINA IMPORT & EXPORT (2010/11)

As far as exports of both the countries are concerned both the country managed
to do pretty well in 2012. China total imports and exports stood at US $2677.28
billion at the end of nov.2010. India’s exports grew by 26.8% and imports
increased by 11.2%. below is presented details about China’s import and exports
for the year 2010.
CHINA'S IMPORT AND EXPORTS (2010/11)
Absolute value Year-of- Year Absolute value Year on
for November growth % for first year
November 11months growth %
for first 11
moths

Export value 1533.3 34.9 14238.4 33.0

Import value 1304.4 37.7 12534.3 40.3

Total import 2837.6 36.2 26772.8 36.3

and export
value

Import and 228.9 20.7 1704.1 -3.9

export balance
Impact of Imports from China on the Indian Economy in General and
Employment in Particular in Share
Even as the impacts of globalization continue to be debated, it is generally
conceded that such impacts are uneven across the economies of nation-states
within particular countries. Some sectors gain more than others, while others
decline China has become India’s leading trading partner. Two-way trade
between the two most populous countries on the planet and the fastest growing
large economies is expected to reach around USD 60 billion by the end of fiscal
year that ends on March 31, 2011.

During a recent visit to India, China’s President Wen Jiabao and India’s Prime
Minister Manmohan Singh agreed to double bilateral trade to USD 100 billion by
20151. The trade deficit has been widening consistently and has reached USD 20
bn in China’s favor causing concern among Indians. India accounts for just above
one per cent of China’s total exports but exports from India to China are a
relatively negligible proportion of total imports by China.

Casual anecdotal evidence points towards a fairly significant level of penetration

of Chinese goods into virtually every nook and corner of markets in India – from
small gas lighters to advanced computers, the “Made in China” product is very
visible across the length and breadth of the country.

China is considered the manufacturing hub of the world. There are allegations
that Chinese firms have unfair advantages over their counterparts in other parts
of the world (including India) in terms of tax breaks and a devalued currency.
Chinese exporters have been accused of dumping.

As a matter of fact, India has initiated the highest number of anti-dumping cases
against China.

It has, therefore, become important to study and understand how the rapid
increase of Chinese imports to India has impacted markets here. On the one hand,
cheap imports from China could force Indian manufactures to become more
productive and competitive. On the other hand, unfair and predatory trade
practices by Chinese companies could prove harmful not only to

Indian industry but to the country’s economy as a whole by constraining domestic

job opportunities or even, destroying livelihoods. Whereas cheap products attract
consumers, concerns about quality and safety.
RESEARCH METHODOLOGY
1. Problem STATEMENT:

As the world looks more and more unpredictable, India should cut interest rates
and figure out a way to compete with China, which is inundating Indian markets
with cheap goods.

2. Research Objectives:

To study impact of Chinese goods on Indian economy.

3. Research Design:

The present investigation is descriptive type of study undertaken to estimate the

scenario.

4. Methods of data collection:

Only secondary data was used to conduct the study. The data was collected from
the official websites of SEBI and RBI.

The final data were analyzed systematically to achieve the desired reserve from
magazines, journals, various websites etc.
CHINA SHADOW ON INDIAN ECONOMY
China shadow on Indian economy

Rather than use tariff barriers to redress its imbalance, Indian should add to the
pressure on China to revalue its currency.

Chinese Economic Collapse-

Corruption, Manipulation, Bad Loans Is the China Bubble About to Burst?

A weak yuan has contributed to a surge of Chinese imports into vulnerable sector
such as raw silk. At another level, China is increasing its presence in strategic
sectors, including power. India has failed to come to grips with this situation.

The governments reported efforts to rein in Chinese incursions into the Indian
economy reflect the dangerous turn that economic relations between the two
countries have now taken. The concerns over the balance of trade shifting sharply
in favor of China have acquired a strategic edge, with state-influenced Chinese
companies gaining a significant share of critical sectors of the Indian economy.
the knee-jerk reaction to this turn of events would be to raise tariff and non-tariff
barriers at random.

But, apart from generating retaliatory measures on the Chinese side, this would
also hurt the beneficial dimensions of trade between two of the world's fastest-
growing major economies. It would be more meaningful to explore the nature of
the unfair advantage the Chinese have and work to create a more even trading
field.

At the heart of the Chinese success is their ability, and willingness, to take the in
struments of state control into the battleground of the free market. Their trade
with the United States has been spurred by keeping the yuan consistently weak
against the dollar. This makes Chinese products cheaper and has allowed China to
gain a major share of the American market.

China's rising exports to the US should normally have led to an increase in the
demand for the yuan and, hence, a strengthening of that currency. But China has
avoided that outcome by buying dollar bonds and simultaneously not allowing the
yuan to respond to market trends.

To the extent that India tries to maintain some kind of stability in the rupee-dollar
exchange rate, the Chinese advantage against the dollar is transferred to the
rupee as well. And if this advantage is countered by the rupee weakening against
the dollar, as it has in recent weeks, it simultaneously raises the cost of our
essential imports.

This has an inflationary impact at home as it pushes up the price of oil and food
imports. There is thus an Indian interest in keeping the rupee stable against the
dollar, even if it offers an advantage to Chinese imports into India.
STRATEGIC INVESTMENTS

The Chinese have built on this exchange-rate induced advantage for their
products in Indian markets through strategic investments in key sectors of the
Indian economy. By keeping their currency weak they are no doubt increasing the
cost of their investment in Indian companies.

But the Chinese evidently believe this investment is still worth their while because
of the strategic importance of the sectors their state-influenced, if not controlled,
companies are investing in. They are now believed to have a significant stake in
India's power sector and are making rapid inroads into the telecom sector as well.
Even as the Chinese are breaking out of old ideological molds to use their state
power in a relatively free global market, India is helping their cause by making it
easier for them to target vulnerable sectors of the Indian economy. A striking
example of this trend is the Union government's approach to Indian sericulture.

Karnataka emerged as India's largest raw silk producing State, largely on the basis
of a concerted effort in the 1970s to develop sericulture as a secondary
occupation for agriculturists. The success of this initiative provided a safety net
for agriculturists in the decades when the Green Revolution began to falter. For
several years now this sericulture segment has faced the challenge of the Chinese
dumping raw silk into the Indian market. Aided by a favorable exchange rate as
well as possible state support, China has been grabbing a larger share of the
Indian raw silk market. And the Indian government has, in its commitment to
liberalization, aided this process by reducing the duties on raw silk. Thus, the
Chinese have developed an ability to hurt vulnerable sections of the Indian
economy. It may be paranoid to see this as being part of a Maoist conspiracy, but
its destabilizing potential cannot be ignored.
TARIFF BARRIERS
The seriousness of the current situation may demand the immediate erection of
tariff and other barriers, but there is little to be gained in the longer term by
building barriers between the two major economies that are outside the direct
impact of the economic crisis that has engulfed the Western world. Rather than
blocking all trade, the way forward would be to target the instruments that China
has used to gain this hold on the Indian economy.

Prominent among the longer-term steps India could take is to join the
international pressure that is being built up on China to make its currency reflect
market realities, at least to a greater extent than is the case today. India would
also have to consider increasing state investment, not to subsidize specific
industries, but to at least offset some of the advantages that Chinese products are
provided by their state.

Special care must also be taken to ensure that state- supported Chinese goods are
not dumped in a way that destroys the most vulnerable sections of the Indian
economy. As India gears up to meeting the economic and strategic threat that
China now poses, it is important to remember that the most rewarding way
forward lies in fair trade rather than no trade.
Invasion of Chinese goods in India-the Whys and How’s
Come any occasion and the Indian consumer is ready to make a beeline to
purchase another of those Chinese goods. For one, these Chinese goods are
substantially cheaper than Indian goods and come in wide varieties. In very simple
terms in Economics, we know that anything like large scale dumping and import
scan spell a disaster for the economy.

In simple Keynesian terms, it is a leakage of Income from the Economy. This

article focuses on the background of the Pricing Policy by China, the damage or
not it can cause for the Indian domestic industry, the anti-dumping tariffs
adopted by the Indian government, the latest Statistics and we conclude with
some Policy suggestions.

As the memory of an Indian consumer goes, this influx of cheap Chinese goods
started in the late 90s and gained momentum thereon. Every article, be it an
expensive Barbie doll or a painting you want to adorn your house with has a
Chinese alternate to it.

Why the Chinese goods are priced so cheap? The cost of production being less in
China is an obvious answer but when we dwell deeper into the world of Chinese
manufacturing, the reasons abound. Chinese goods are known for their moderate
quality, prompt delivery and affordable prices in comparison to Indian goods.
Following are some of the reasons behind Chinese goods being
cheaper than Indian goods
1) China does not have stringent intellectual property rights (IPR) issues so come
any new product in the world market; China is ready with a cheaper alternate.
Thus, there is no cost of research, designing and redesigning of any product.

2)The labor is not demanding and does not go on strike.

3)Where most Indian companies are striving for a Total Process Review (TPR) for
quality satisfaction, Chinese companies are not so particular.

4)China does not have any after sales tax on its products leading to a further
lowering of costs.

5)Are we enjoying the cheap Chinese goods because the Chinese currency Is
undervalued leading to purchase of cheap Chinese goods? This needs to Be
carefully studied.

6)The cheap Chinese labor is another major reason for the dirty cheap Chinese
goods especially like toys where intensive labor techniques are Employed.

7)With the removal of quantitative restrictions (QR), the ending of the textile
quota regime and Chinese accession to WTO, the dumping activity by Chinese has
increased manifold.

8)Lower rate of Indirect taxes on Inputs. High level of cash subsidies being offered
by the Chinese government to its producers and exporters.

9)Lower taxes enable the Chinese companies to participate in the world market at
a lower margin and thus dominate it. Adopt the business model focused on higher
volumes is a natural progression in this scenario.

We must also mention here the advantages of the high economies of scale and
higher level of Productivity achieved by highly skilled labor. We must remember
here that China could not have been able to do it alone. The import of technology
and Infrastructure from West has played a very important role. Had West not
opened its gate to the Chinese products, China could not have boasted of such
huge trade surplus. China Imports very little from the rest of the world.

It is noteworthy to mention the reverse Chinese model of manufacturing. China

produces in bulk and sells in bulk. Rather than waiting for the orders and then
producing, Chinese have mastered the art of producing first and selling it later.
This is possible due to low interest rates and low taxes Chinese government
imposes. This model helps the buyers as they do not have to wait for the produce.
They can inspect, pay and ship the delivery in a single day!

Since Chinese accession to WTO, China has been much more liberalized in
reducing Tariff and Non-Tariff barriers. The Liberalization measures taken by
China have been broader and deeper in nature though it entered WTO in
1991whereas India has been a member since Inception. Dumping Meaning and
Effects- The simple meaning of dumping is to sell your country’s products in other
countries at unfair lower rates than the domestic rates prevailing in the country of
Export leading to losses to domestic suppliers.

China as indulged in large scale dumping all across the world; India being majorly
affected. Here it has to be remembered that everything you complain against will
not be qualified as dumping. According to WTO, if Investigations prove for such
goods falling in the anti-dumping bracket that the exporter is charging a price
below than what he charges in his domestic market or if the volume of imports is
too high so as to cause a disadvantage to the local producers can be called as
dumping. Thus, we conclude that not any and everything will be classified as
dumping. Once a complaint is filed, it has to be investigated by a designated
agencies taking into account the WTO laws.

Dumping wars have gained strong ground especially in the times of recession,
with India filing maximum number of anti-dumping cases against China. A growing
in security for India in resorting to levy of high anti-dumping duty is the current
high trade deficit with China. Can we forget to mention here the case of green?
veneer tape, where the Interest of the local monopolist was protected at the cost
of consumers getting a better product at more competitive prices? Besides
dumping is not the only way Chinese goods enter India, much of it enters through
illegal route of Nepal.

China leads in the number of anti-dumping cases filed against any country in the
WTO. Between 1995 and 2005, India filed more anti-dumping complaints against
China than any of the developed nations of US and Europe. Anti-dumping
measure have become more popular today to offset unfair competition, in
relation to other measures such as QR‟s and import quotas which are non-
discriminatory in nature and require injury in severest form.

To India, the pinch is more in those areas where it is also a large producer such as
chemicals, toys, electronics, leather and textiles. Recently anti-dumping Import
duties have been filled on acrylic fibers, Analgen, potassium permanganate,
paracetamol, sodium nitrite, caustic soda and green veneer tape.

From 1995-1999, India initiated 140 anti-dumping investigations which are

highest for any country. Many feel this is not fair. Its sale seen that the amount of
anti-dumping duties levied are against the basic rules. This also arises due to the
non-market economy (NME) status of China in countries such as US. As we
examine, we find out that the entire amount of duty which is levied against the
Chinese goods is flawed.

Here it is pertinent the meaning of a Non-Market Economy. In very simple terms,

a Non-Market Economy is one which does not operate on market principles of
cost and pricing. For NME‟s, the value of its goods does not reflect the true price.
In most cases in US, it is seen that where the Chinese companies fail to respond
against the AD case, (Many a times due to Ignorance of the legal structure) it gets
more of an unfair deal.

China’s relation with US - It has already been mentioned that the boom in China is
“made in USA”. Another question which is being asked commonplace today is
“Are Economies such as US and Europe overly dependent on cheap Chinese?
products?” The answer is „no‟ as Stephen Dunaway rightly points out, that due to
intense competition, the cost differentials between China and other counties has
indeed narrowed down. Another point which needs mentioning is that China’s
Economy is highly export dependent on countries such as US, so we may as well
study the dependence the other way.

China is facing strong opposition of dumping from the European countries as well.
these Countries are levying a high import duty on vast scales Chinese dumping of
leather goods. To salvage their own domestic Industries countries like Japan are
resorting to high level investment in China to sell back in their own domestic
economies. This will soon be followed suit by many other economies. FDI is
playing a big role in China’s technological process with China becoming an
attractive destination. India and China are considered at par in terms of
investments. India with its paranoid behavior is lacking in many respects to
provide a suitable ground to MNC‟s to invest in the country thus losing big on FDI.
Current Strategy-The Protectionist path: What stand has India taken
on Chinese? Dumping?
India’s strategy revolves around Imposing high tariffs and taxes on Chinese goods
whereas countries like Japan have resorted to a high in China to counterfeit
Chinese dumping. How does this work? Does it affect level of FDI in our country?
With the dumping allegations against China Increasing; what holds good for India
now? Is putting high level of tariffs the only solution? One, a high level of tariffs
does promote a menace called smuggling and offers no solution. Indian
consumers end up paying more for products they could have brought cheap.
Doesn’t the simple theory of comparative advantage tell us?

those two countries should produce and exchange products with each other in
which they have a comparative advantage in? Also trade between two countries
should be a multiple of their GDP‟s. Antidumping tariffs are not a solution, for
one as suggested by many an economist, the line between protecting the
producers and consumer welfare is very thin. Anti-dumping games only prevent
the competition rather than the competitors.

In some cases where the product is being used as a raw material and an anti-
dumping duty is levied on it, the end user industries suffer because of the cost of
rise in their raw materials. They come at the mercy of the monopolist, duo
politico the cartelized arrangements in their own country; thus, the entire
arguments of levying the anti-dumping duty becomes a façade. This is clearly
illustrated in the case of imposing a safeguard duty on soda ash. It was
vehemently opposed by the detergent and glass manufacturers. Their arguments
being that imports of soda as are less than 10% of the total domestic production
and it doesn’t qualify for dumping. These imports just help in keeping a reality
check on the prices.

The Government recently imposed a 6 month ban on the import of Chinese toys
to India and withdrew it within two months after Beijing warned of going to WTO.
The Domestic industry is now alleging China of becoming a price predator (Price
Predation refers to selling at lower prices to acquire market share and increasing
prices in future) this time. Is it a case of artificial pricing or high? intensity of
competition amongst Chinese products which make similar products cost
upto70% less is to be seen. Another Important fact to be mentioned here is that
anti-dumping Investigations takes long time for final settlement which can easily
damage the domestic Industries. This has to become faster paced especially in
authentic cases wherein the domestic producers are affected.

Where does the solution lie? Are not increasing the Tariffs an easy solution for
India or does it need to work on its own domestic problems? How competitive is
Indian manufacturing? Why are we not able to offer price parity with the Chinese?
India has a rather dismal rate of competitiveness. The World Bank gives India
allow rank of 40 out of 46 countries in terms of its manufacturing prowess. What
is it that is holding the manufacturing sector? These are but a few questions we
may ask in context of the given study. It is very clear that there is a tradeoff
between the benefits to the consumers and the producers and a balance has to
be maintained for the sanctity of justice in trade is to prevail but easier said than
done, the solution isn’t that simple.
It is time the Government of India examines its own policies
All fallacies do not lie with the manufacturing sector.

1.Indian manufacturers do not get adequate Infrastructure.

2. They have to pay high level of taxes.

3 To remain in the reserved sector to get certain privileges by the Government

they have to remain small and can’t then enjoy the “Economies of scale” as
enjoyed by their Chinese brethren.

Time has come to develop and enhance inter industry trade with China; knowing
that Chinese exports have substantial complementariness with Indian imports.
FDIin India till now has not entered the way it has entered China; owing to
Chinese tax breaks, business tax exemptions given to foreign firms which has not
happened in India.

These are few of the factors which raises the cost of production for Indian goods
making it difficult to compete on price basis with Chinese. Imposition of anti-
dumping and safeguard duties are not solutions; Timehas come to raise the
efficiency and Competitiveness of our own Industries. Unfair Methodology
adopted by US, India and other Countries - We discuss some unfair practices
adopted by countries in the anti-dumping war against China.

1. The anti-dumping margins are grossly overstated.

2. The domestic producers use them as their weapon to get advantages to the hilt.

3.The zeroing methodology is widely criticized. (Zeroing methodology means that

when the Indian price is higher instead of assigning a negative value to this, it
attaches a zero, thus eliminating the negative trade margin) This is against the
basic rules of WTO.

4.The going of the collected anti-dumping duty to the domestic producer in the
US doubly hurt the Chinese companies. They have to pay penance in the form of
anti-dumping duty and their revenue is dispersed to their domestic competitors.
Market Economy status for China and Impact on India-With China’s entry into the
WTO, there is much talk happening about granting of MES to China. (MES-When
the exporting country is treated at par in terms of transparency and prices are
known to be decided by the economic forces. What forbearing it has for India?
For once a market economy status doesn’t take the anti-dumping prowess from
you. It will be in the best interest if India does it earlier rather than becoming a
mere follower to other countries. This has more political considerations rather
than economic. It is also to be remembered that granting of MES to China will not
have any effect on the trade deficit. On the upside, it will ensure that Indian
manufacturers improve their efficiency at the earliest possible along with
substantial developments in the infrastructural development. Investment linkages
between India and China will also grow in coming times.

Reforms need to be Implemented by WTO- The need of the hour is not the
complete dismantling of Anti-Dumping duties but some reforms to be
implemented at the WTO level.

The WTO rules and regulations in terms of the anti-dumping measures are
entangled with many rules and regulations. Reexamination of duties impose
dafter a certain time period, a maximum limit to the amount of duty imposed,
making the concept of “Injury” clear, abolition of back-to-back cases, time taken
for the finalization need to be worked upon Future Prospects- As all good things
come to an end so will the heavenly rights enjoyed by China.

The price of Chinese products in near future will be more realistic as IPR is
enforced. The west too is realizing the huge trade surplus of China, the recent
imposing quotas on Chinese textiles (Better known as the Bra War) bringing China
to reality grounds. Also, though China has maintained the price of its goods as
static to capture large share in world volumes but it is sooner or later going to
face the rising cost of raw materials.

China would soon increase its prices when it enters the market economy status
which is 2016 for US. We must not forget that India and China produce similar
kinds of goods in terms of their export basket to the West. China has highly skilled
labor and a comparative advantage in the assembly stage of technology.
India has to improve its manufacturing process; non-tariff measures such as Anti-
Dumping will only prove to be detrimental. In many cases, it has been observed
that the mere filing of a case leads to a total disruption of trade. Trade relations in
the coming years between these two BRIC giants are bound to improve, China’s
imports are surging into India on account of their product diversification and
competitiveness. The reality is that 72% of the products imported are at par with
Indian Quality or even superior. The World today sits back to notice when a
professor claims that in 2050the trade relations between India and China will be
the most important economic relationship in the world and these countries will
drive the growth of the entire world leaving far behind the Giant four.
CHINESE GOODS CHOKING THE INDIAN MARKET

Chinese Goods Choking the Indian Market

In reference to the topic “CHINESE GOODS CHOKING THEINDIAN MARKET” we
came to know various facts about Indian markets as well as Chinese market, as
also how China is invading the Indian market in checked & thereby killing the
Indian units. Some of the alarming facts in this regard are as follows:

• Chinese government offers a lot of tax benefits & subsidies to the

manufactures.

• Compared to Indian government, which results in high taxes on raw materials

in India as compared to imported Chinese goods & hence Chinese goods cost
lesser as compared to finished goods made in India. As a result, Chinese goods
are becoming popular in India.

• Chinese business has penetrated deep inside the Indian markets and as result
crippling the Indian economy and its self-sustainability. The range of markets
engulfed by China vary from low priced toys of linen fabrics, batteries,
porcelain tiles, compact fluorescent lamps, machinery, tires, penicillin, radio,
torches and DVD players and so on.
Moreover, the cheap Chinese goods lack in terms of quality too. Some of the
disadvantages of Chinese goods are:

• Lack of durability.
• Toxicity of goods.
• No guarantee or back service

Threats that Indian industries are facing & going to face in near future due to the
Inundating of Indian markets with Chinese goods is: -

1)Industries related to toys, fancy lighting, electrical accessories which are almost
completely overshadowed with Chinese brands.

2) Now we are facing immediate threat as far as energy sector is concerned.

3)IT/BPO and automobile manufacturing companies are to face the challenge in

next 2-5 years.

4)80% of our dependence for power plant equipment is in China.

5)China has captured anywhere between 60-90% of India’s $2.5-billionToy market.

Industries affected by invention of Chinese market in India: -
1)60% of industrial units in the industrial belts of thane and Bhiwandi near
Mumbai have been closed down.

2)The small-scale industry (SSI) contributes 35-40 % to the total Manufacturing in

India and this is the most affected sector.

3)Even a health giant like Wockhardt had to shut down its Rs 100-crore plant
producing acetic acid for vitamin C after a flood of Chinese imports.

Now after eyeing the impending disasters of the issue, the gathering was
confronted with the following concerns

1)How can we stop invasion of Chinese market?

2) Why are we unable to stop the invasion of Chinese market?

The students were exhorted to think on these lines and the unanimous decision
was that at personal level we can take step like

• Make people aware of Chinese invasion in India,

• Harmful effects of Chinese goods,
• Avoid buying the Chinese goods with conviction for some visible change to
become apparent.
CHINESE GOODS IN INDIA
Chinese Goods In India:

JKB35-30 low price mud brick machine China goods in India

Min. Order: 1 Set

FOB Price: US $9000-15000 / Set

Place of Origin: CN; SHN;

Power: 140Kw;

Capacity: 11000PCS, 11000pcs/hour;

Processing: Brick Production Line;

Brand Name: Junxia Machine

Tire recycling machine for tyre oil! China Goods in India!

Min. Order: 1 Set

FOB Price: US $25000-70000 / Set

Place of Origin: CN; SHN;

Type: Tire Machine, pyrolysis machine

Brand Name: Wharbo;

Tire Machine Type: Tire Recycling Machine

Automatic fly ash brick machine making, China goods in India

Min. Order: 1 Set

FOB Price: US $17918-18628 / Set

Place of Origin: CN; HEN;

Power: 75 kw;

Capacity: 14000-18000 pcs/hr.

Processing: Brick Molding Machine;

Brand Name: Longman; Method: Vacuum Extrude

Mobile and moving concrete block making machine made in China with good
price qmj4-45, cement brick making machine price in India

Min. Order: 1 Set

FOB Price: US $1-3500 / Set

Place of Origin: CN; SHN;

Power: 7.4kw;

Processing: Brick Production Line

Brand Name: jinlong;

Condition: New

;Brick Raw Material: Concrete

Small clay brick machine hot sale in India

Min. Order: 1 Set

FOB Price: US $5000-500000 / Set

Place of Origin: CN; JIA;

Power: 132kw (Small clay brick machine);

Processing: Brick Production Line;

Brand Name: HW-Clay Brick Machine

FINDING

Pros & Cons:

Pros & Cons + Positive aspects Relatively Cheaper than the regular/known brands.
Advanced Features Affordability, common man can easily purchase. Widely
available Higher profit margins for dealers. - Negative aspects Unsafe products
non-long-lasting Resulted in closure of many businesses, which lead to
unemployment, lower turnover. Outflow of capital Increased in Imports & Media
has recently highlighted the technical issues about the Chinese products. E.g. The
continuous explosion in China phones, has resulted in the ban of Chinese phone
retailing in Indian market. Decrease in exports. And those phones are: -
BLUEBERRY NOT BLACKBERRY Same design Same color shade May behaving
advanced features Very cheap Same has been done to various products and
brands e.g. Apple iPhone, Because of cheaper prices products made in China are
becoming more popular among the Indian masses. This has had a very negative
effect on our own manufacturing units and as a result many of them have had to
shut shop. There seems to be no way to escape the DRAGON!!!The Chinese goods
have invaded almost all the sectors of Indian market and seem to be bringing
tougher times for the Indian Industry. Because of wide availability of cheap and
apparently technologically advanced Chinese goods, many economists fear
decline of local manufacturing units or the small-scale industry in India. The rise in
demand and sudden popularity of Chinese products, which are available at
cheaper prices, is giving nightmares to the Indian industry to the extent that they
have started sticking “Made in China” stickers on their products to boost their
sales.

Chinese manufacturing units produce goods on a large scale. They are using the
big Indian market merely to dump their products and by doing so they are killing
the Indian units. For example, last year during Diwali, China made crackers were
sold in the Indian market. These crackers reportedly contained Sulphur. Sulphur is
more harmful than Nitrate, which is used in India to make crackers. Since the
Chinese crackers were cheaper than the Indian crackers, so they managed to
attract gullible and largely illiterate Indian lot. As a result, the Indian cracker
industry saw decline in the revenue.

For India China is major competitor in sectors like software, hardware, and
electronics etc. We should not allow China to dump their excess produce here.
The small-scale industry (SSI) contributes 35-40 per cent to the total
manufacturing in India. So, it is the SSI, which suffers most because of Chinese
goods?

For instance, data reveals that 60 per cent of the industrial units in the industrial
belt of Thane and Bhiwandi near Mumbai have been closed down. Many small-
scale Indian companies have stopped manufacturing their own goods as now they
import them from China. That’s why many Indian workers have lost their jobs.
This shows that the objective of SSIs of providing employment to the rural youth
of India is defeated completely.

In the last one-decade Chinese labor has developed the skills of manufacturing
electronic goods like semi-conductors, telecom equipment, power equipment etc.,
which helped them to capture big markets of America and Europe. It is no
surprise that they have been successful in capturing the Indian market too.
Although Indian labor can meet these challenges by improving their skills, the
Indian manufacturing scenario is hampered due to stringent and weak labor
policies. It is the high time that our political leaders change their mindset and
bring about the right kind of reforms without losing precious time in endless
discussions. We must take necessary steps so that we do not fall prey to the
DRAGON‟s designs of capturing a major share of our growth, which could prove
to be a setback for our economy in the future.
CONCLUSION
China and India had similar development strategies prior to their breaking out of
their deliberate insulation from the world economy and the ushering in of
Market-oriented economic reforms and liberalization. China began reforming its
closed, centrally planned, non-market economy in 1978. India always had a large
private sector and functioning markets which were subject to rigid state controls
until the hesitant and piecemeal reforms of the 1980s. These became systemic
and far broader after India experienced a severe macroeconomic crisis in 1991.
The political environments under which reforms were initiated and implemented
in the two countries and their consequences were very different. India continues
to be an open, participatory, multiparty democracy, while China has an
authoritarian, one party regime, though it is liberalizing. After recounting the
differing rationales as Well as the similarities and differences in the content of
their reform agenda, I Reviewed in Srinivasan (2002) the achievements of reforms
and remaining Challenges, particularly regarding reforms of state-owned
enterprises (SOEs). I concluded with an analysis of the competition between China
and India in world markets. This is concerned with external sector issues, in
particular, the spectacular performance of China relative to India in their
competition in world markets as well as the emerging perception in India of the
opportunities in the large and rapidly growing Chinese markets. It also notes the
protectionist backlash hat China’s growing dominance in world trade and India’s
success in Information Technology have induced in the US and Europe.
BIBLOGRAPHY

➢ Wikipedia- Google search engine

➢ Investopedia
➢ www.made-in-china.com
➢ www.china2you.in
➢ www.mamagementcanvas.iimindore.in