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SMEs cementing Sino-Indian relations

January 17, 2013

You might hear of the Zoomlions, Huawei’s, Tata’s and Reliance’s of the world browsing businesses and plumping profits between China and India, but an increasing trend and a strong flow of human and financial capital crossing between China and India are also smaller, lesser known companies in either market, that anonymous to those outside their core markets are creatively and seamlessly cementing links amongst out two nations. Forging into new market, treading new tie-ups and bravely going where few large companies have been, smaller firms from both China and India are exploring each others markets.

Take for example, China’s Yapp, an automotive company based in the town of Yangzhou, not too far from the Eastern megapolis Shanghai, which has inked a 49:51 JV with India’s Zoom Enterprises and operates facilities in Chennai and Pune. Manufacturing plastic fuel tanks, the JV supplies to major car makers including Volkswagen India, Ford India and Mahindra. According to Sun Yan, President of YAPP: “We expect India to be the biggest overseas market for us.  As India is fast becoming a big producer and consumer of automobiles, second only to China, we are nevertheless positive on our growth potential in this country”.

Similarly, Indian Technocraft Industries has set up a factory in Nanjing, on China’s Eastern seaboard for scaffolding systems, steel boards and clamps. The owner of the little known equipments company told CNN, “In China, the benefit primarily was the raw material cost, … The overall cost of production in China is much lower. Even now, the cost differential between here and China is around 10 to 15 percent. And then you have the labor cost difference. Once you add in all the productivity etc. the labor cost in China is definitely lower.” The company which has manufacturing facilities in Thane, a district outside Mumbai, added “In India you have a lot of hidden costs,” Saraf explained. “In China they welcome foreign investment, they welcome industries to be set up there. So setting up was relatively easy and quite fast so you also save on the time. The faster you start up the faster is your recovery on investment.”

These new breed of small and medium companies understand the value of developing markets and are keen to exploit the untapped potential between our markets. Without the weight of a large multi-national, many SME’s both privately and publicly funded are able to reach out similar SME’s across the border and work on successful JV’s that benefit both markets. Adding value to the neighboring market by creating jobs, building factories and through exports these SME’s are exactly what our nations need to seal the deal. While large companies might make headlines and are great to boost bilateral trade morale, it’s the smaller companies that create value and strengthen softer skills between our people. Lets hope this trend continues!

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