India a quagmire for Chinese companies amid COVID-19, causing $50m loss so far

By Chu Daye Source:Global Times Published: 2020/3/18 21:53:40

A vendor makes gifts for the Valentine's Day celebrations in Jammu, Indian-controlled Kashmir, Feb. 8, 2020. (Str/Xinhua)

India is becoming a quagmire for hundreds of Chinese companies investing or operating there, with severe supply chain and cash flow woes and tens of millions of dollars at stake.

A survey of 60 Chinese companies in India, obtained by the Global Times from Zha Liyou, Consul General of the People's Republic of China in Kolkata, indicated that some 67 percent of the surveyed enterprises are facing supply chain issues, mostly due to India's blanket ban on entries of Chinese citizens. 

Whereas the coronavirus pandemic outbreak has shown signs of waning in China, with no domestic infections reported on Wednesday, India is potentially experiencing a surge in new infection cases. 

India has so far reported 137 cases, but the country's large population, low hygiene levels and weak medical infrastructure are fueling concerns among observers on whether the situation will worsen.

However, it is India's blanket ban on entries by Chinese personnel that is causing havoc for Chinese businesses operating in the South Asian country. Almost all companies interviewed in the survey conducted by Draphant Consultants said the entry ban is the foremost challenge they face. India has canceled virtually all visas until April 15. 

Zhou Yiming, an executive with the Indian branch of Shenzhen Angel Drinking Industry Group, said the ban directly crippled his company's operation. 

"Many of those who are banned and cannot return to their work posts are directors of boards or legal persons, without whom the company cannot function, from a chop on a compliance report to physically engaging with customers."

Still, the average employee counts as much as a board director in terms of keeping a project from derailing.

"Our equipment has arrived at the port, but the accompanying engineer is blocked from India, so there still is no delivery," one respondent wrote in the survey.

A delay in delivery leads to other issues such as failing to generate income, straining cash flows and affecting upstream or downstream peer Chinese companies.

Wang Yonglin, chairman of Chamber of Chinese Enterprises in India, told the Global Times on Wednesday that the Chinese business community in India once averaged 20,000 people, but because of the Spring Festival holidays and the COVID-19 outbreak in China, now only 2,000 are in India.     

An incomplete tally had pointed to a loss of more than $50 million so far, Wang said.  

The survey also revealed that 40 percent of the surveyed companies are set to experience cash flow crunches within the next three months and one-third of the cash-strained companies have chosen to delay payment. 

Almost all Chinese companies surveyed are calling for the Indian government to alter its blanket ban. 

"Should Chinese companies run into problems in India, it is the Indian people who will pay the cost eventually," wrote another respondent.

Some two-thirds surveyed are expecting revenue losses with 28 percent seeing the loss to be in the range of 20-50 percent.

However, Chinese companies are not giving up on the Indian market. CRCC Zhuzhou Locomotive Co, which is responsible to maintenance in the subway in Mumbai, told the Global Times on Wednesday that it is increasing its prevention against the pandemic at its work site while ensuring the supply of parts to get the project ready.

Posted in: ECONOMY

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