H E Mr Zhou Gang

‘Chinese companies are keen to set up joint ventures with their Indian counterparts,’ says H E Zhou Gang, Ambassador of China and ‘Chinese goods are not cheaper due to government subsidies,’ says Zhao Qingmao, Commercial Consul of China.

The India-China Chamber of Commerce and Industry (ICCCI) hosted a dinner in honour of H E Mr Zhou Gang, Ambassador Extraordinary and Plenipotentiary of the People’s Republic of China to the Republic of India, on November 9, 2000. indiamarkets News Service spoke to H E Zhou Gang on the nature and significance of India-China trade relations.

indiamarkets also spoke to the Commercial Consul of China Zhao Qingmao about the avenues for bi-lateral cooperation that are likely to open up due to better India-China trade relations.

indiamarkets: Where do the trade relations between China and India stand today?
H E Mr Zhou Gang:  China and India are neighbours and are countries with large populations that account for a substantial proportion of world population. There is a great need as well as potential to develop trade and economic activities between these two great nations.

In the last ten years, since 1991, the volume of bi-lateral trade between China and India has increased from $ 265 million to $ 2 billion and we expect a further increase. Both  countries have to overcome the adverse impact caused by the Asian financial crisis of 1997 by increasing economic cooperation. It is in the interest of the peoples of both countries to promote mutual understanding and development of the overall relationship.

Leaders of both countries attach great importance to further improvement of economic cooperation. President of India K R Narayanan visited China in late May this year and both the presidents discussed this matter and reached consensus. H E Jiang Zemin President of People’s Republic of China put forward four proposals for further improvement of relations between China and India. One of the four proposals is to strengthen economic cooperation so as to lay a more solid foundation for overall relations between the two countries.

When the Union Minister of Commerce and Industry, Government of India, Murasoli Maran visited China in February this year, he had in-depth discussions with his Chinese counterpart and reached consensus on economic matters. Through this medium, I wish to thank the Government of India for its support to China for admission to the WTO.

It has also been decided that China will hold an engineering and commodities fair in New Delhi, starting December this year. China also welcomes India to hold a similar fair in Beijing in the first half of next year. Many Chinese provinces and companies are expected to take part in the Chinese fair to be held in Delhi. Many Chinese companies are keen to set up joint ventures with their Indian counterparts. And we are confident that the joint efforts of both the governments will open up great possibilities for economic cooperation.

indiamarkets: In your capacity as Ambassador of China, what are you working to achieve?
H E Mr Zhou Gang: My mission and my honour is to make a humble contribution to further improve relations between these two great nations.

I will work to implement the four proposals that have been put forward by H E Jiang Zemin, President of China so as to increase contacts between the two people and promote mutual understanding and friendship. I will strive to remove the misgivings and misunderstanding that exists due to some historical factors and will do my best to improve economic relations as this in the mutual interest of both countries.

We must stand high and look afar to handle the mutual concerns that are left over from history. The world economic order is unfair and unjust. China and India as the two biggest developing countries are facing opportunities and challenges. To handle these challenges, cooperation between the two countries is required. I wish to gain cooperation and consensus on important economic issues and international affairs so as to safeguard the interest of China and India as well as other developing economies.
 

Interview with Zhao Qingmao, Commercial Consul of China:

indiamarkets: How should developing countries like China and India deal with the WTO challenge?
Zhao Qingmao: China and India are large countries and both have the task of developing their economies. China is trying to enter the WTO and if China enters, many issues will arise that it will have to deal with. The developed countries have set down many of the norms of WTO. Now when China enters the WTO and its opinion is asked on any new policy, both China and India can consult and then give their opinion. Thus developing countries will have a bigger voice in the WTO.

Firstly, the biggest challenge that faces China is that many laws have already been laid down by the WTO. The laws of China may not conform to all these WTO laws. Therefore China will have to correct this quickly and this is a big job and challenge facing China.

Secondly, these laws have to be advocated to the Chinese companies and they have to be educated. This again is a big challenge because the companies will not be able to export if they don’t know the new laws and standards. The third challenge faced by China is to enhance the quality of the goods produced by Chinese companies to make them acceptable in world markets. Chinese companies have to be taught the importance of quality.

China is now an open market economy. The Government of China wants the SME sector to reform and reconstruct their business operations and their management to survive in this new scenario. The government is not going to protect the SMEs. No subsidies are to be given to them. Instead, we will train them to understand the workings of a market economy. We wish them to go out of China and see what is happening in the world. The government will give no subsidies. We want to open the minds of the Chinese businessmen. Otherwise they will think that what they are making is good. We want to educate the SMEs and create a good environment for them.

Before 1997-98, the government used to give subsidies to Chinese companies. But after China became a market economy, the government has stopped doing that. However, there is a misunderstanding in India. It is believed that Chinese goods are cheap because the government is giving subsidy. Chinese goods are cheap because the Chinese companies have imported and adopted new technology, improved their management style and have employed highly qualified technicians. The excess labour within the organisation has been redeployed productively. All this has made Chinese companies more efficient and therefore Chinese products are cheaper. In China, raw material and labour are also cheap.

Further, in India anyone is allowed to export. It is not so in China. Chinese companies must pass stringent government inspection before they are allowed to export. They are permitted only if price is reasonable and quality is good. This is important for building respect in the world for products made in China. It is a matter of national pride.

indiamarkets: What is the potential for trade between China and India?
Mr Zhao Qingmao: For the period January-September 2000, the bi-lateral trade volume has touched $ 2.06 billion, which is 44.1 per cent higher than the volume for the same period last year. China’s export to India totalled $ 1.09 billion; an increase of 32.2 per cent over the same period last year while India’s exports to China was $ 0.97, an increase of 60.3 per cent over the same period last year. We are optimistic that bi-lateral trade volume will touch $ 2.5 billion by the end of the year 2000.

The items that account for the increase in exports from India to China are software and iron ore. China exported a higher quantity of coal to India. Items exported from China to India include textiles, toys, chemicals intermediates/raw materials, machinery and equipment and electronics. India exports raw cotton, iron ore, steel, chemical raw materials and software to China.

As of today, economic relations between China and India are rather narrow. As we are neighbours, the cost of transport is lower and therefore goods are cheaper. Hence there is a great potential to increase trade between these two countries.

indiamarkets: What attracts the Chinese businessmen to India?
Zhao Qingmao: Many factors contribute to this. India has now opened its economy and welcomed foreign investment. Now many high level delegations from both countries are visiting each other. The relations between the two countries have improved and this is important for the business community. Once relations are good businessmen in both countries are more willing to do business with each other.

Chinese companies are attracted to India because it is a very large market. The middle class is huge and has substantial purchasing power. Thus the Indian market offers great potential. Further India’s software sector is developing very fast. More than 100 Chinese are right now living in Bangalore so as to develop and then send the software back to China. While China is sourcing software from India, China is interested in investing in the Indian infrastructure sector. China has very good infrastructure technology. We have well-developed roads construction technology, a highly developed power sector and a technologically advanced telecom sector.

From 6-9 December 2000, we are organising China’s largest Commodities Fair* in New Delhi, where many Chinese companies are likely to participate. We invite the Indian business to come there and interact with their Chinese counterparts.

indiamarkets: What is your role as the Commercial Consul of China?
Zhao Qingmao: My role as Commercial Consul is to build a bridge between the companies of both countries. The Commercial Consulate of China helps the companies in India to get in touch with companies in China. Sometimes Indian companies write to Chinese companies but there is no response. This is because many companies are still not fully familiar with English. When this happens we write attach a note in Chinese to the fax. This increases the chances of getting a response.

Similarly, we help Chinese companies find good business partners in India. Since we are based in India we know the profile of the Indian companies and can advise Chinese companies accordingly. Indian companies wanting to do business with Chinese companies in the same way should get in touch with the Commercial Consulate of India that is based in China. It is also important that the Indian companies looking for business relations with Chinese companies should investigate the companies thoroughly before going ahead. The quality and reputation of the company should be carefully studied.

Trade relations between the two countries have improved. The number of delegations from China to India this year has gone up. Two investment delegations from the major provinces of Hebei and Guangdong visited India to evaluate investment avenues in India. More Indian businessmen are visiting Trade Fairs held in China. This relation can be improved further.

What is required is a greater level of understanding between the business community of China and India and that is what we are trying to achieve.

Zhao Qingmao can be contacted at chinacon@bom5.vsnl.net.in

*Details of the Fair to be organised in Delhi from 6-9 December 2000
(Details obtained from ICCCI email: icccicn@bom8.vsnl.net.in):

THE CHINA ENGINEERING & COMMODITIES FAIR will be held at Hall No. 14 of Pragati Maidan, New Delhi from 6 to 9 December 2000 with 130 participating Chinese companies. Sponsored by MOFTEC of China and co-organised by CII of India, the Fair covers 4600 sq.m., and mainly focuses on the fields of engineering and construction including :