Govindraj Ethiraj: India-China: Queering the pitch

Double Edge

Last week, I spoke to Radhu Phulwani, who runs a substantial textile-trading business out of Shaoxing, a four-hour drive from Shanghai. He also heads the Shaoxing India Business Association (SIBA). In the course of conversation, I wondered whether someone like him would expect anything from Chinese President Hu Jintao's coming visit to India. Actually he did.

Phulwani told me that for several years, he had been lobbying for permission from the Chinese authorities to formally register his India association. There was a large Indian community in Shaoxing comprising mostly textile traders drawn from different parts of the world. The close to a 1,000-strong Indian community now wanted to create a legal entity so that it could invest in a building, create a club or an office, and have its own assets and corpus.

The Chinese, he said, had accorded "informal" permission for the association but there was nothing on paper. Because of which it remained a virtual entity. Phulwani said he understood the concerns of the Chinese. "But ours is not a political or religious body. We want to register an entity for social reasons," he says.

The second point he said was to do with India-China trade. In his industry there was little recourse if a deal between two parties collapsed. "What you need is a joint industry body that can step in and act as an arbitrator," he says. I was surprised to learn that no such body existed, given that we are collectively targeting $30 billion worth of trade by 2010.

And yet Phulwani says he is as star- struck by the growth and opportunity today in China, more than a decade's stay later. "See, the opportunities are dramatic. And the infrastructure and change are unimaginable. I have to say that we are enjoying," he says.

It struck me that while the Indian government perceives some Chinese companies as security threats, Indians in China have their own problems. The somewhat tight regime restricts their natural way of life. Having seen Indians and their proclivity in forming associations (in countries like the US and UK) and cultural bodies, I can quite understand their predicament.

On another note, late last year, I was part of a small CII Young Indians delegation of businessmen (me being the exception), visiting China. One of our stops was Zhongguancun Software Park, the Silicon Valley area of Beijing and home to some of the world's biggest tech brands. Our itinerary included a visit to a mid-sized Chinese IT services company.

We sat through a small presentation on the company and threw a few questions at the founder. Turned out that at the end of the presentation, the founder was more keen to know about us than we him. Only one member of our delegation ran a real software company and that too a small one. Thanks to him and the fact that Bangalore was in India, we were all treated with respect bordering on deference.

Next stop was Shenzhen, a three-hour flight south. One of our first visits in the morning was a company that specialised in closed circuit television technology. It was not a cold reception but not warm either. Then we visited the Great Wall Computer Company, a large assembler as well as branded PC maker. It was like being part of some victory parade. Not only did we get the full boardroom treatment but were also lavished with a corporate dinner. We parted like we had become friends for life.

The Chinese IT companies' desire to engage with India was almost desperate. India was like any other country that could help them achieve their objectives. Actually, some of the companies I've encountered have had military origin. On the ground, however, they were like any other businessmen, pragmatic, opportunistic and hungry.

Incidentally, I worry about our dominance in IT and cricket. Because China is on time-bound programmes to achieve supremacy in both. I am convinced after my visit to Zhongguancun Park that if China beats us in IT Services, it will have business-hungry Indian companies to thank. Note that TCS alone will employ over 5,000 in China in four years.

On cricket, by 2009, according to the five-year plan, there will be at least 720 cricket teams across China. The target is to qualify for the 2019 World Cup, and, of course, beat India in a Test. The idea behind adopting cricket, as you might have guessed, is not just to play the game but also to engage actively with the rest of Asia.

Which brings me back to Hu Jintao's visit. Despite all the efforts, I still believe much of our China view is based on a few, somewhat misguided, presumptions. First, that everything China does is only for military domination""note our attribution of the infrastructure creation efforts in south-east China to military reasons rather than correction of economic imbalances.

Second, because of this, every company or organisation in China is a front for nefarious military objectives. Third, the Chinese would not have been able to do what they have done if they did not have communism.

Going by own interactions with the Chinese IT folk, I would argue that India has to work harder to appreciate China's cold pragmatism and result-oriented approach. Going by what the likes of Phulwani have had to say, the Chinese have to understand that Indians are socially bound and are often sentimental and emotional. Though I do hope the Chinese don't have to succeed in cricket for us to understand their sheer determination. I would hate to lose to them as well.

govindraj@business-standard.com