Chinese investors must wait and see on India opportunities following border tension

By Hu Weijia Source:Global Times Published: 2017/7/4 21:58:40

Chinese companies operating in India need to be alert and take precautions to avoid being hit by anti-Chinese sentiment following tensions on the border between the two countries.

In 2014, several Chinese nationals were killed and more than 100 others injured in anti-China riots in Vietnam after media reports said China fired water cannons at a Vietnamese vessel to frustrate moves by Hanoi to disturb China's normal resource extraction in the South China Sea.

Violent attacks against Chinese personnel and companies may happen in India if the two countries see even small-scale military tension at the border. Many people believe Indian nationalism led to the country's independence from British rule decades ago but now it is gradually evolving into an internal factor behind the anti-Chinese sentiment, which is fuelled by ethnic and religious factors. Last year, Shiv Sena activists openly burnt the Chinese flag on the streets, according to media reports, after India failed to gain entry to the Nuclear Suppliers Group (NSG) due to alleged opposition by China. Compared to the NSG membership, India's territorial issues can much more easily stir up local people's nationalistic feelings.

Chinese firms doing business in India, especially those in the retail and consumer electronics industries, need to take precautions against possible boycotts and should strive to ensure the personal safety of Chinese workers if there is an escalation in tensions between the two countries. Although India is a potential market, would-be investors from China should perhaps take a wait-and-see approach. In this context, new investment from China into India is likely to be reduced.

By the end of 2015, the accumulated investment from China into India had reached $3.55 billion, and most of the Chinese firms doing business in the country saw a proportion of local employees of over 90 percent.

The fact that Indian troops recently crossed into Chinese territory will not necessarily lead to a withdrawal of Chinese firms from India, but New Delhi has to safeguard the security of Chinese-funded institutions against possible anti-China riots. 

US President Donald Trump's plan to bring manufacturing jobs back to the US comes with a rise of trade protectionism in the West, making China an inevitable choice for India to work with during its "Make in India" campaign. In order to make itself a promised land for Chinese manufacturers, India needs to spare no effort to maintain the stability of its economic cooperation with China during this period of tensions, even if that is not an easy thing to do.

The author is a reporter with the Global Times.


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