Demonetised India less enthusiastic with moderately priced Chinese goods

Sairaj Iyer

Thursday’s turn of events at Trade China, an expo that covered over 1 lakh products across 20 product categories were grim. The event was representative of the current situation- dipping interest in Chinese exports and demonetization. The three-day expo organised by CII and Me Orient expos was supposed to be a match-making show for businesses to source quality products from China. About 900 Chinese companies had booked stalls ranging from 9 sq. m to 50 sq. m, with a promise of 40,000 footfalls. But the event did not attract more than 6000 footfalls leaving many stall owners to dejectedly pack-off for China.

No China

There has been a growing cry for avoiding Chinese goods. It would be impossible to adopt such policies, as India follows WTO compliances. But saying a no to China owing to little innovation and availability of such products may kill Chinese enthusiasm. “There is little innovation. One can get better products in Ulhasnagar,” opined Naman Singhal, an Exim trader dealing in supplies of paper-cup machinery.

Despite all the resistance to Chinese made goods in India, the data from the Ministry of Commerce shows that trade in 2016 improved to Rs. 404 bn from the previous Rs. 369.5 bn in 2015. But Chinese exports have dipped in product-lines such as iron and steel, plastic articles and organic chemicals as per data for 2015 from Trademap. The expo dealt in categories such as Lighting, Furniture, Textile and Garments, Home Appliances, Household & Gifts, Food, Building Materials, Hardware and Tools, Power and Electricity, Auto parts besides Machinery items too. But crowds seemed less enthused and were on the prowl for products such as painted UV Panels, Robotics, and Electronic Silicon boards.

Sameer Singh, a trader and musician had come all the way from Ahmedabad and was forced to return empty-handed when he realised that there were no painted UV panels. He pointed out, “I had seen a product which could be painted on a traditional roof and it would work as a UV panel. Here they are showing us batteries and traditional UV panels.”

Cashless consumers

If the dipping interest of customers was a worry, then demonetization was nightmarish for many stall-owners. For instance, Hu Zhou, a Regional Manager in an Agricultural Machinery factory of Jinfei Holding Group could manage to sell only one unit of a fertiliser dispeller unit through three-day event. “Last year we sold nearly 15 items each day of the event. This year we discounted the price from Rs. 20,000 to Rs. 14,000 but the sales were still low,” he shared through his translator.

Nearly half of the stall owners were provided with electronic devices that accepted cards, however, many procurers were least interested in these and the remaining stall-owners suffered from no card-devices. Steven Zhou, Sales Manager at Yulin Garden Tools managed to sell three drill machines for nearly Rs. 3,000 and all in cash. “But, last year we had sold 50 such devices in three days,” she added with dejection all across her face.

Machinery in Demand

Categories such as machinery saw positive demand among tepid consumer behaviour. Jason Jiang, a Manager with QAIC bearing manufacturing factory was happy to work on 50 fresh leads besides getting 5 serious enquiries for distributorship. His company manufactures large bearings, some of them as large as 1.5 ft in diameter.

Anant Deshpande, the Executive Director at Wool Export Promotion Council who had earlier shared with The Dollar Business that China is dipping in the wool sector was greatly enthused in the machinery show. “This platform is good to procure new machinery and understand what is in vogue in the international markets.” JB Soma associated with the Textile Association felt that demonetization has crippled the market, and hence this is a great time to invest in machinery thanks to “negotiations” at such shows.

Canton Ahead

Sharon Zhou, a foreign trade manager at Ruian Mingbo a machinery manufacturing firm remained optimistic that the situation could be temporary but was apprehensive that the same situation could be witnessed at Canton in 2017. “We usually sell 10 such paper-cup forming machines in India every year. This time, we have sold none but have managed to find potential leads and distributors who are interested in our products.”

Post November 8 it has been a topsy-turvy world for many SMEs and businesses, but the hardships of a foreign business are plenty. Thankfully foreign trade is dealt majorly through guarantees and cashless facilities to save itself from an economic impact such as demonetization. Imports from China in 2015-16 were worth $61 bn, of which the top ten imports amounted to nearly $48 bn. India's top imports from China are electronics ($20bn), nuclear reactor and machinery ($10.5bn), chemicals ($6bn) and steel ($2.3bn). Sadly, India's share in China's global export of $2 trillion is a measly 3% but China will not want to lose market with the world's second most populous country.

A senior official from CII who did not wish to be named quipped that Indo-Chinese relationship holds great promise and there is an expectation that China-India should target $500 bn in the coming ten years at an estimated 20% y-o-y but the dismal acceptance of Chinese wares makes one think if this is logical. Sadly, while the Chinese seemed dismayed during their exit from the show, workers at the venue were quick to start prepping for a Korean trade fair on December 18. Maybe it shows that there are more options.