Can India boycott Chinese Products?
BOYCOTT CHINESE PRODUCTS
“Boycott Chinese goods” a rising clamour in India is a situation raised after the border clash which left 20 Indian soldiers martyred. There is a tension on the border where the air support is deployed with artilleries, amid Ladakh standoff.
This wave of Boycott is seeming to be a powerful move at first considering the patriotic sentiment of the Indian economy. But when we have a look at the numbers pertaining to trade (import-export), trade deficits and investments. This clamour is nothing but just an unrealistic and unreasonable aggressor where we can pinch China but end up cutting down ourselves. Social media is being used as an aggregator in this clamour, hashtags like #BoycottChina and #BoycottChineseProducts are trending.
💡Clamour – a loud and confused noise, especially that of people shouting
But a boycott that’ll probably hurt the economy of a country really have a base to it? Is it a reasonable stance and so we have a real hope of success?
⚡️Recent update – Indian government has banned 59 Chinese apps on 29th June 2020.
4. UC Browser
5. Baidu map
7. Clash of Kings
8. DU battery saver
11. YouCam makeup
12. Mi Community
13. CM Browers
14. Virus Cleaner
15. APUS Browser
17. Club Factory
19. Beutry Plus
21. UC News
22. QQ Mail
25. QQ Music
26. QQ Newsfeed
27. Bigo Live
29. Mail Mast
Information source – Economic Times
“Anti-China sentiment only on social media, unlikely to impact India business.” – Xiaomi India CEO Manu Jain
“If you have ingested antibiotics or vitamins, China is in your blood, literally.” – Priya Ramani
“It’s becoming a nationalist issue post the ‘Vocal for Local’ call given by the Indian Prime Minister earlier this month. Any Chinese company looking to set up operations will see a delay in decision making.” – CEO of a leading auto company
DESCRIPTION – Let’s take a Deep Dive
It is not the first time that such boycott movement has heated up. There have been similar attempts of a consumer boycott in the past, which didn’t gain much success many times and history testifies the same. In the early 1930s, China itself had tried to boycott Japanese products, it was done to raise a protest against Japanese colonisation. Similarly, French goods were boycotted by US consumer forums in 2003 to protest against France. France had declined US request to send troops to Iraq post 9/11.
Israeli and American products are boycotted by Arab nations many times with regard to their stand on Palestine. Most of these boycotts were failed and a very simple reason for this is: “economics disobey all shackles perpetuated by emotions and isolationism.” Moreover, living in a world where we say globalization has caused disruption in each and every existing sector and economies are interlinked intricately, where supply chains, resources and expertise of countries being used in integration with each other to gain a competitive advantage for companies. Any product or service that has spread its roots globally or has a global market has some of the other component or element in their offering which is imported/outsourced to a country who possess expertise in manufacturing/supporting that particular component/service element.
China has always been in the news for manufacturing and exporting low-quality goods, human rights issues, conflicts related to territory expansion and the latest is, where China is declared guilty of developing and spreading the novel coronavirus. The world has witnessed unethical behaviour of China when It comes to trade and dumping their low-quality products in a country at cheaper rates which affect the domestic business of any country. Thus, the unethical business practices and other series of annoying activities which are bothering other nations and companies. Boycott China products campaigns are raised worldwide. Countries like India, Philippines, and Vietnam called for a boycott of Chinese goods, as have separatist movements in China itself. It is not easy to achieve this “full boycott of Chinese products”, as the country is expert in large scale manufacturing with the supply chain allowing the nation to produce goods at cheaper rates. Goods manufactured in China are widely sold, used and consumed across the world.
Indian pharma companies are largely dependent on China for chemicals, electronics & telecom devices used in India are majorly imported from China where the top sellers of mobile phones are companies like Xiaomi, Vivo, Real Me and Oppo, machinery and IT infrastructure needs of India are met by China, 30% of India’s automobile components needs are met by China and near about 90% of the country’s toy market is dominated by Chinese products. Capital goods are imported from China which sums up to become a finished product in Indian manufacturing units, these goods are then sold in domestic as well as international market via exports.
China possesses expertise in large scale manufacturing and we cannot deny the fact that their products play a vital role to build competitive pricing for products a company offer in the market. It can be witnessed in – Apple which is considered to be the epitome of premium-ness assemble their phones in China, why? Cheap labour and cost-saving is the answer.
Why India cannot boycott Chinese products?
Is “Boycott Chinese products”, an unrealistic aggressor? You decide for yourself
- India is the biggest importer of Chinese consumer goods as per the trade figures. India imports more from China as compared to the exports it does to China, almost seven times more. We can say that India has a huge trade deficit with China. India’s exports to China in 2018-19 were mere $16.7 billion, while imports were $70.3 billion, creating a trade deficit of $53.6 billion.
- China’s exports to India account for only 2% of its total exports. However, if Indians boycott China products, it won’t make a huge impact on China. China is India’s largest trading partner and this is something which will cause a problem for India rather than China because trade is heavily skewed in favour of China. Initiating a trade war is not a smart move when Indian manufacturing ability is limited and won’t favour India.
- Import of goods from China accounts to a wide range of product categories, viz. consumer durables like electronic goods, solar cells industrial goods, vehicles, smartphones and essential pharmaceutical products.
- As per the data from 2016-2017, 60% of India’s import requirements of electrical and electronic equipment was fulfilled by China. In India out of the five bestselling phone brands, four are Chinese – Xiaomi, Vivo, Realme and Oppo. These brands occupy 60% of the smartphone market and dominate the market. The Indian toy market is completely dominated by China, around 90% of the toy market is occupied by Chinese products and 30% of India’s automobile components needs are met from the imports via China. Similarly, demand (50%) in the country’s bicycle market is met by imports from China and has a large share. Some of the critical sectors in the Indian economy are largely dependent on imports of Chinese goods.
- Considering the Chinese investments in our county, the tech space investments have seen a massive spike in recent times. According to a report published by Gateway House, it is estimated that around $4 billion of Chinese tech investment has happened in Indian startups. Alibaba Group a Chinese multinational technology company specializing in e-commerce, retail, Internet, and technology alone has strategic investments in Indian startups like Big Basket -$250 million, Paytm.com-$400 million, Paytm Mall-$150 million, Zomato-$200 million and Snapdeal-$700 million. Other Chinese groups, Tencent Holdings, has an investment in Indian firms like Byju’s -$50 million, Swiggy-$500 million, Dream11-$150 million, Hike Messenger-$150 million, Flipkart-$300 million and Ola-$500 million. These elite Indian startups and firms have other non-Chinese investors, also Indian investors who hold majority stake which gives them the power to control these companies. But due to Chinese investments, it is difficult to classify them as Chinese or non-Chinese. However, referring to these insights we cannot take any immediate actions boycott without acknowledging the associated benefits India reaps from the business relationships between India-China.
- In this pandemic situation, India is helping other nations by providing them with medicines (hydroxychloroquine – considered to be a possible cure for COVID-19), PPE kits, masks, etc. India is the largest manufacturer of hydroxychloroquine (HCQ), its manufacturing greatly depends on the Active Pharmaceutical Ingredients (APIs), or the raw materials used in the manufacturing of these medicines or formulations. China happens to be one of the leading producers and sellers of APIs, which makes us dependant on China, this indeed is a raising alarm for us before we boycott Chinese products.
How can India boycott Chinese products?
How should be tackling this situation? What can be done?
- The vague boycott campaign won’t buy us self-reliance or help us achieve an Atmanirbhar Bharat. A practical blueprint which is realistic in terms of implementation needs to be designed, following which India can achieve its objective to become self-reliance.
- An environment should be created where the manufacturing of goods is done in India and these goods are equality competent with the quality and cost offered by. India should focus on creating alternatives for Chinese products, for this, the government should pour investments R&D, growth of MSEs should be promoted (Medium and Small Enterprises). India lacks an ecosystem that promotes innovation.
- National Science and Technology Management Information System (NSTMIS) of the Department of Science and Technology (DST) has released some statistics which show that while R&D expenditure in India has grown thrice in the period from 2004-05 to 2014-15, it accounts to only 0.7% of GDP. Compared to the 2% expenditure of China (2015) and 1.2% expenditure of Brazil (2014), respectively. Whereas, Israel spend as much as 4.3% of GDP on R&D. India should focus on resource allocation and increase the spend on R&D, which will help to equip our industries with necessary and cutting edge technology and skill to fight this trade battle.
- The rate at which loans are issued for businesses should be revised and lowered so that more and more people are motivated to take loans. The same should be done for corporate loans. Recently, our finance minister Nirmala Sitharaman announced package which is aimed to cater to the needs of various sectors struggling and fighting for survival. Active steps should be taken to make sure that the package declared is actually implemented. India must also focus on the development of infrastructure, services, etc. to compete with the supply chain of China.
- Liberalization of foreign direct investment (FDI) should be undertaken, India receives 25% of the FDI that China gets, while only 10% of what the US receives. Increase in FDI will promote development in the industrial sector which will lead to better efficiency and productivity.
- India should also work towards reducing its dependency on Chinese products by diversifying its import basket, where we import for countries other than China.
China wants to acquire new markets for its manufactured goods. India is a hot market for China no doubt where its electronic goods, especially smartphones, has acquired a large market base. But we are not the only option for China, it can also set its eyes on other Asian countries and even Africa.
As we know China is also trying to create a market base for its goods in Europe. If we assume that China is solely dependent on India to sell their goods, then let me inform you that the assumption is not backed by any evidence. Moreover, WTO (World Trade Organization) doesn’t allow such sudden boycott, as they are responsible for the smooth trade flow between countries.
The steps mentioned above can take us closer to self-reliance if a collective effort is put up.
Though it is true that the boycott won’t cause much harm to China and India is largely dependent on China for their import needs. But if India takes their self-reliance and Atmanirbhar Bharat initiative seriously, China will get a hit in the long run. Boycott campaign which is building up worldwide with China found guilty in spreading COVID-19 has built a case against China, where China wants to safeguard its image as an emerging global power and is trying hard to portray itself as a responsible economy.
A negative propaganda building against China and the escalation in India-China border conflict will harm China’s bid to portray itself as a progressive nation, rather China is being seen as an authoritarian dictator worldwide. Hyper-nationalism and jingoism won’t help India and it is not the solution to the problems India is facing now. Sincere efforts should be undertaken to resolve regional disputes through diplomatic consultation and dialogue.
What is up next?… Will Russia intervention work? Let’s wait and watch…..
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Author – Snehal Namade
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