From the Viewsroom

The ‘Boycott China’ delusion

Paran Balakrishnan | Updated on June 22, 2020

Its market penetration in India can hardly be shrugged aside

China was once the greatest enemy of the Indian tyre industry. Low-cost, made-in-China tyres were always a great temptation for buyers. But there’s been a change since around 2017. Nearly 80 per cent of tyre imports now come from Thailand. Only 15 per cent hail from China. How did that happen? The answer quite simply is Chinese companies, to beat anti-dumping actions and higher tariffs — mainly from the US — have been opening plants in Thailand, Vietnam and Malaysia. “Thailand’s the new China,” says Rajiv Budhiraja, director-general, Automotive Tyre Manufacturers Association. He adds: “If imports stop temporarily from Thailand, then Vietnam will be the new champion.” And forget country labels; some Chinese manufacturers can even offer tyres without company brand names.

Anyone launching a ‘Boycott China’ movement should keep the tyre example in mind. Once upon a time, we’d look at our shirt labels to know where the product came from. Now, determining nationality is a tougher game. Should we boycott a Chinese company’s products made in Vietnam or Thailand? Or, look at it another way. China’s largest solar panel manufacturer, LONGi, has been mulling constructing an Indian plant. Should we stop the plant coming up? Alternatively, should we refuse to buy from LONGi even they do build it here?

Let’s not even look at pharma or the electronics industry, where it’s impossible to buy a product without Chinese inputs. Consider the Indian auto components industry, which holds its own against the world. The industry imports items worth $17.6 billion, says Vinnie Mehta, executive director, Automotive Component Manufacturers Association. Of this, $4.75 billion comes from China. “There are certain tech competencies we’re deficit in, like auto electronics,” says Mehta. In recent years, due to tougher safety standards, vehicles and electronics items like sensors and actuators had to be bought from China. Also, the switchover from BS-IV to BS-VI needed to be achieved quickly and imports were the only solution. Many sectors of our Covid-decimated economy would be hit even harder if we make sudden moves against the Middle Kingdom, which has turned itself into the world’s factory.

The writer is Editorial Consultant with BusinessLine

Published on June 22, 2020

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