China, COVID and Convection

It was just the typical day; I come back from office, greeted by a steaming hot tea cup. This was followed by a de-brief of the day’s activities with emphasis on the tasks which remain undone. As I sat down for channel surf, newsreaders were happily sensationalising the ban on 118 Chinese apps. It seemed most rational to reduce the funding for China in the volatile situation at the border. A reported $ 14 billion loss for PUBG alone seemed quite satisfying with the hot tea cup. But as I eased on the cushion, an alarming tone from a worried wife broke my sense of satisfaction. Apparently, the microwave oven was not baking a particular cake variety within time stipulated by a renowned chef. Intelligent guessing by me lead to believe that the microwave oven’s heating is uneven and needs major overhaul. During lockdown, having little hope of finding an authorised service centre, I proposed to buy a new one. My wife stared coldly (as I wanted to replace a gift by her brother), but agreed after some pursuance.

In view of the dire need, I thrust myself onto the internet in search of a microwave oven. By now, the tea-cup was staring back at me! Stringent criterions were dictated to me – capacity, colour, convection menus etc. most important being ‘Made in India’.                My wife wanted to shun any Chinese made item, charged-up and aligned, I sifted through products on offer. Flipkart, Paytm, Amazon, Tatacliq and a dozen more websites claimed to have just the microwave oven I needed. Wading deeper waters than anticipated, I thought about whether the money stays in within India exclusively post purchase?

, I went ahead and chose filters to select only Indian manufacturers. Ah! what a satisfaction, a number of Indian-made models on display, ‘Make in India’ seemed at the forefront. As I was about to finish purchase, a cheaper product came up as a suggestion with same specifications. Indian evergreen budget constraints needed due deliberation especially when the new option offered 33% discount. Curious and unable to fathom why it is so, I went on to research about the company. ‘Lo and Behold’, it turned-out to be Chinese with an Indian front company based out of Kolkata. Importing and distributing it in India was well established to ward-off sniffers. The triumph that I had of banning of apps and boycotting Chinese products seemed fizzling slowly away. This instance got me thinking about the government policy and its percolation down to ground zero. It is fairly easy to blame it on the government and policies in vogue. Also, the wide ranging steps conceived can be put under the microscope. An average resident spends less than 10 minutes prior declaring that government policies are wrong and leadership needs revamp.

Be that as it may, the end point is the customer, whose needs and requirements are most important. The nature of customer is the most volatile attribute needing due diligence by a certain manufacturer. He needs to be able to please the customer and lure him back into buying the same product. This repetitive and compulsive behavior is the very basis of a successful business. In India, a business faces a cut-throat market and needs a smart strategy to compete with foreign players. Local manufacturers inherently shall be able to minimise production costs leading to lower purchase costs for a customer. However, it is not sacrosanct as some products can be cheaper produced outside India including the import duty levied. Hence, a foreign manufacturer (may be Chinese) is able to undershoot price offered by the local manufacturer. This brings out a question – Why is China able to outplay a local on his home turf?

The question is not why but how (opaque subsidy schemes may be a contributing factor), China employs parallel running production lines for a multitude of items. China is more developed than India and enjoys some advantages as compared to India. Firstly, vast abundance of material resources, machinery and technology makes it possible to produce a variety of products. Secondly, easy availability of cheap and efficient labour with assured work throughout the year. Thirdly, the abundant availability of a huge market not localised to a particular product or country. Fourthly, a strong judicial system backs the manufacturing units and reforms are much easier to come by. Also, the level of corruption is comparatively lesser and is tightly controlled by the CCP. Further, the power of state funding keeps giving companies the leeway to flood the target country with own products albeit at adequately lower prices. This strategy works towards killing the local produce. Hence, the customer is coerced and looped into buying the cheaper (probably less quality) but readily available item.