Why Boycott of Chinese Goods Might Fail?

October 12, 2016 Author: Vishwagujarat
Boycott of Chinese Goods

Indian politicians are at present leading a movement to boycott goods imported from China. But a report on an IndiaSpend analysis shows the possibility of failure of a campaign.

China is India's biggest trade partner, a sixth of India's imports are Chinese, up from a 10th in 2011-12, while India's exports to its competitor have cut in two over the same period.

Imports from China grew at 20 per cent over two years and 5 per cent over five years, to $61 billion. These goods range from power plants, set-top boxes to idols of lord Ganesha.

This is regardless of the fact that because of a fall in global oil prices India's imports have normally fallen over the last five years -- from $490 billion (Rs 23 lakh crore) to $380 billion (Rs 25 lakh crore).

Apart from cotton, copper, petroleum and industrial machinery, India does not export much to China. India's exports to China have fallen from $18 billion (Rs 86,000 crore) in 2011-12 to $9 billion (Rs 58,000 crore) in 2015-16. This means that India buys six times the goods it sells to China.

Cell phones, fertilisers, Solar cells, keyboards, laptops, displays and communication equipment -- including earphones -- these are India's chief imports from China, according to our analysis of Ministry of Commerce data.

Other major imports from China include tuberculosis and leprosy drugs, children's toys, ball bearings, antibiotics, industrial springs, LCD and LED displays, routers, TV remote controllers and set top boxes.

Even though political leaders, including Himanta Biswa Sarma, Sharad Yadav of Janata Dal (United) from Bihar, the newly-inducted Finance Minister of Assam, and Anil Vij, Health Minister of Haryana, are appealing for a boycott of "Made in China" goods.

Yadav, for example, in recent times said "Balance of trade between our country and China has become imbalanced which will be very harmful and dangerous for our domestic industry."

Vij said "People should not buy Chinese goods. Instead, Indian goods should be used. Trade with China is affecting our country. China is not our friend nation. China can buy weapons with whatever money it earns. There is a possibility that the weapons are given to enemy countries... We should focus on Make in India."

Stagnating indexes for the manufacturing sector show that India is still struggling to compete with China. Despite a record foreign direct investment of $55 billion in 2015-16, private investment in manufacturing is still lethargic.

IndiaSpend visited Manish market, the hub of imported Chinese goods in Mumbai. Here Chinese products are cheaper, neatly packaged, available in bulk and easy to buy.

"If the 50 different types of LED lamps that I sell were available from say, Surat, at a cheaper rate and at my doorstep, why would I go for Chinese lamps?" asked a lamp distributor and retailer, requesting anonymity. "If I had to buy these in India, this collection would cost me double."

China moved forward with speedy market reforms from the 1980s, pushed by the organizations of special economic zones. Land and labour reforms helped it ramp up its production capacity. The result is that India's steel, iron and fertilizer production is a 10th of China's.

China's export story is also motivated by ease of market access. Take the example of Sumant Kasliwal, who runs an apparel e-commerce start-up in Mumbai. After two years of trading experience for merchandise in India, he switched to China before two years. His sales have tripled since.

Customers rarely have to waste time in China searching for markets and products, said Kasliwal. It took him less than a week to buy a three-month consignment.

"Even small market-towns like Yiwu -- comparable to Varanasi in terms of population -- have a one-stop, dedicated market for all consumer durables, from fashion to home accessories, with cost and quality options," he said.