Published On : Sun, May 24th, 2015

India still a pygmy. China is about to overtake USA in economy: Ghosal

DSC06379Nagpur: Since Modi visits all eyes are on China. Though we compare ourselves with them and think we are a super power too, compared to China we are nowhere, explains Prof. Debraj Ghosal while speaking at a TIE forum in Chitanavis Centre, Nagpur.

But China offers great potential for Indians to do business – both imports and exports.

Debraj Ghosal was born in Russia, raised in Nagpur, studied in BCS, Hislop and then LIT. Work with Auto Companies like Tatas, and then Mahindra and Mahindra began taking him to China and soon he became an expert on it – has traveled extensively to 75 Chinese cities and says ” I have seen more of China than India”. Ghoshal is now Assistant Professor at K.J. Somaiya Institute of Management studies and Research.


He was in Nagpur briefly and like many ex Nagpurians or people of Nagpur origin, he wants to “give back to the city” so spent his valuable time giving a detailed talk about opportunities in China to fellow Nagpurians in a well attended seminar on Friday.

China is like Salman Khan “ek baar commitment kar leta hoon to khud ki bhi nahi sunta”

China has surged ahead despite being a very large and populated country because the executive writ reigns supreme. When the main leader decides on something, he will literally move heaven and hell to achieve it.

Remember the 2008 summer Beijing Olympics? One of the grandest world has seen.

Preparations for it began years ahead of the show and everything was ready months before the actual event began- unlike Commonwealth games in Delhi 2010 which was such a hotch potch put- together- at -last -minute thing mired in controversy after controversy.

About 8 months before the Olympics, Chinese leaders realized that Beijing which was an overpopulated, dense city had a lot of air pollution – like Delhi still has – and foreign ( read American and European) athletes and officials would definitely notice and comment. So they decided to make it green instantly. What did they do?

  1. They closed down polluting industries, either temporarily or permanently at once. Workers were sent on long leave, factories closed for interim period and/ or relocated.
  2. At a stroke registration of all odd number ending motor vehicles was cancelled for a year! So exactly half the vehicles were off the road and vehicular emissions went down.
  3. Mature, fully grown trees were uprooted from forests and transplanted to Beijing overnight! As Debraj Ghosal, who was living in this city with his family then recalls : “one morning I woke up and found my street completely changed, it was like waking up in another place… there were huge trees lining the road which had not been there the previous night.”

With these three measures, by the time the Olympics began, Beijing must have been one of the greenest cities not just in China, but Asia!

They did not stop there. They trained their own athletes the sports persons so hard that in the final tally China won more medals than USA!

This is how they go about doing anything – sheer will power of a few men imposed upon the whole nation and no one can complain or go against. Just like they imposed the one child per family rule to bring down over population.

Industry in China is Government controlled/ owned and always scaled up hugely

When Ghosal was in Tatas and they went to China to do business, no Chinese cared for the famous TATA name. When they said we make 70,000 to 80,000 trucks annually, they replied – So? We have many factories that makes millions of vehicles every year!

This was the main reason everything made in China is much cheaper than elsewhere – it is made on a very large scale. Labour was cheap, and was compulsorily relocated wherever needed. Earlier at least, they did not care about cost to environment and resulting pollution. Not just factories, they built the world’s biggest dams too.

Industries are also located in clusters round the country – not concentrated in some few cities like in India.

Yet China is not equally developed all over. South and East are well developed, North and West are comparatively backward.

Not lacking in quality at all

We, in India joke about the poor quality of stuff made in China. Short life of products. Cannot be repaired. But that is because Indian traders source the cheapest products to sell in India, explained Ghosal.

“If you negotiate hard and reduce price, they will not say No – they will just give you the poorest quality” said Debraj.

But stung by such criticism from other parts of the world too, China went about investing heavily in R&D and developing quality products. A policy decision had been made many decades ago to send bright Chinese students to study in the best universities of USA and England. Many of them continued working there and rose to senior positions in Corporate America. The choicest among them were wooed to come to their homeland by tempting them with 2 times, even 3 times American salaries. They were ordered to set up comparative facilities and budgets were never a dearth. (A lesson for Modi Govt. who has slashed budget on high education and R&D in India). People of Chinese origin were employed from Singapore, Hong Kong and even Taiwan.

So today, you name any latest generation electronic product – smart phones, computers, robotics, space equipment, electric trains, steel products – they are made in China.

Chinese are filing for maximum number of product patents world wide now.

Chinese lay aside their traditional hostility with Japan to learn and import Quality from them. Quality in products, quality in systems also. South Korea had trodden the same path, but China has left it behind now.

Problems besetting China now

  • How much can you produce and go on selling? A saturation point will come in, and it has come in China. So growth rates have fallen from 11% at one time to 9% later and 7% now.
  • Population is old, since birth rate was strictly controlled. There are more old people than young – and old people do not buy as much. Work force has also reduced, and labour are not willing to relocate away from their home towns. It is becoming increasingly more difficult to keep running large enterprise which are labour intensive.
  • The most pressing problem is air and water pollution over much of China. They are paying now for the sins of scaling up everything – the resulting pollution is also on a very high scale. They are now dealing with it, like they deal with everything else. Firmly and ruthlessly. Polluting industries are being closed down, products banned, quality standards raised.
  • Other developing countries are competing with China now for US and European markets; even countries like Bangladesh are giving them stiff competition in some sectors like textiles.

Opportunities for India

  1. In adversity, lays opportunity. And China today offers many buying as well as trading/ selling opportunities.
  2. As is already well known many raw material like auto components can be bought cheap in China.
  3. Making use of the industrial atmosphere in China smart Indian Companies like Tata and Mahindra and Mahindra are joining hands with Chinese partners, or buying up Chinese companies, and making the final product in China – with Chinese names too. Such companies have the double advantage of Indian and Chinese work pool to select from. One big example is the Land Rover which was purchased by Tatas from UK and is now being made in China. It has a vast market right there.
  4. Cotton products have good demand since agriculture is decreasing and they are turning to different food crops since their eating habits have changed.
  5. With prosperity increasing, there are many very rich Chinese now – almost equal to rich Americans and Europeans. They have an appetite for good things in life. Designer clothes; foot wear; food. More and more people are turning to non veg cuisine only resulting in heavy shortage of pork ( pig meat). Chinese are buying land in other nations to raise pigs. They are importing surplus food grains to feed the pigs. If some clever Indians could teach them to appreciate goat meat and chicken too – we could have a great market!
  6. Rich, retired Chinese are turning world tourists now. Paris is a favorite destination. If developed properly, even Nagpur resorts can offer great wild life and ‘culture’ destinations where they can travel our forests and learn Yoga and meditation. Money was the Chinese religion till now – they are getting interested in re learning Buddhism from India and else where.

Indians can teach Chinese Yoga, English and Computers

  • These are the only areas where China acknowledges Indian supremacy. Their proficiency in English, their ability with computers and their tradition of Yoga and meditation etc.
  • We can teach Chinese English in China – but we must do it with an American accent. No one is interested in Indian or even British accents!
  • With success and riches have come tensions and ill health. Specially now that the average Chinese is getting on in age and has a lot of money saved. There are Indians who have learnt a smattering of Chinese, have learnt Yoga themselves in India, and set up very thriving Yoga classes there.
  • NIIT is probably the most respected Indian Company in China since it has hundreds of branches all over the country imparting computer training. Smaller, niche companies also exist and can thrive.
  • Social networking skills are increasing and sought after. Even if Facebook is not allowed it is still accessed surreptitiously and other such social media growing. Think AliBaba company’s success and you get the picture.

Chinese Banks

  • Not only is China a great market place, but since it is rich and it has surplus funds it is now aiming to be a lender . And like all Chinese plans, this one is grand and ambitious. Move over world Bank, and American banks AIIB is here – According to sources –
  • The Asian Infrastructure Investment Bank (AIIB) is an International Financial institution proposed by the government of China. . The purpose of the multilateral bank is to provide finance to infrastructure projects in the Asia region. AIIB is regarded by some as a rival for the IMF , the World Bank and the Asia Development Bank (ADB), which are regarded as dominated by developed countries like the United States.
  • Chinese Premier Li affirms AIIB cooperative stance. As of April 15, 2015, almost all Asian countries and most major countries outside Asia had joined the AIIB, except the US, Japan (which dominated the ADB) and Canada. North Korea’s and Taiwan’s applications for Prospective Founding Member (PFM) were rejected.
  • The first news reports about the AIIB appeared in October 2013. The Chinese government has been frustrated with what it regards as the slow pace of reforms and governance, and wants greater input in global established institutions like the IMF, World Bank and Asian Development Bank which it claims are dominated by American, European and Japanese interests.
  • USA did not like the emergence of this bank at all and has warned its friends and allies to not deal with it, but no one is listening.
  • This bank will not ask many questions like the IMF, will not lay down conditions and will still give you loans at competitive rates of interest. They should only be assured of your profitability.

Mr. K.V. Kamath, of ICICI Bank and Infosys is slated to be the first CEO of the AIIB Bank also known as the BRICS Bank.

So what is the future that China is looking at?

  • China’s ambitions are clear. It aims to be the world leader, replacing USA, as soon as possible. Thus the BRIC bank and so all the advances in newest technologies.
  • China is the world’s most populated nation with 1.3 billion people and 105 trillion RNB ( renbinbi)…which is what currency is called in China.
  • If our PM, Modi has a slogan on ‘Make in India’ Li has an aim of
  • Made in China – 2025.
  • It is simple – all the world’s most sophisticated produce will be made and available in China. China will be the world leader in all such products.
  • Move over USA – your position is going to be usurped soon.
  • Indians – start looking East rather than West for your own good.