New Delhi, India -- (SBWire) -- 02/20/2012 --The recent case of Indian traders being kidnapped in China has opened up a can of worms. Apart from the case revealing weaknesses in the Chinese judiciary (as I had highlighted in an editorial a few weeks back), it has also brought out in the open something that traders from India (and other countries) were facing for a long time but not speaking about openly. The big trade that happens between India and China is through the scores of wholesalers operating out of wholesale markets in India like the Sadar Bazaar in Delhi. These are not the big guys who prefer getting into litigation that easily; they also aren’t amongst those who operate with lawyers and bigger paraphernalia. These are smaller traders, though huge in numbers, who go to Chinese towns like Yiwu in particular and pick one or two containers of goods worth Rs. 30 lakh to a crore once every quarter. And they now fear entering China. The question is why? Can one incident of kidnapping shake up an entire community of traders, especially when China is such a good bargain for them? Or was this not that stray an incident after all?
Consider the case of Manish Rewari. He has been doing business in exactly the same town of China for years now. And swears by the advantages that China gives him in his business as he shows off a fascinating watch that he is wearing while narrating his story! He had first seen the same watch in a wholesale outlet in Karol Bagh (a shoppers’ paradise near Central Delhi). The shopkeeper quoted Rs.22k as the best price for the watch to Manish. Not be outdone like normal customers, this China believer – in his next trip to Yiwu – went around various shops and found out exactly the same watch. And the price for a single piece was Rs.2.5k; and for bulk order of more than a hundred pieces, Rs.1.2k per piece. A watch enthusiast, he picked up only one watch for his consumption.
If that sounded nice, just a trip before this particular trip, Manish’s experience was not as good. He used to work with a Chinese agent then. During his previous trip, he had struck a small deal and purchased goods for Rs.75k through the said agent. The agent took the money, delivered him the goods, but never paid the original seller. The next time, when Manish came and tried to directly deal with the seller, the moment he provided his old receipt with the previous agent’s name to show the price at which he had bought the goods in the previous trip, the seller pounced upon him. His grudge was that he had not received the money for that particular transaction. Manish very courageously tried to defend himself by saying, truthfully, that he had obviously paid up for the same. This he did despite knowing "that they [the Chinese seller] could pick him up and make him disappear". His reasoning clearly was of no help because soon, there were scores of the seller’s people and henchmen who came from all around and surrounded Manish. Sensing trouble, Manish approached the nearby police, who in their very usual unfriendly manner told him in Chinese that they were there to protect only the interest of the Chinese. That's when good sense prevailed. Manish knew that he had come for just three days and had a lot of deals to strike. And this would only get messy. And spending a few days in jail like a few others he had heard of was not a great idea. Manish grudgingly agreed to strike a deal with the disgruntled seller, and paid fifty percent of the pending money again as settlement (since it was too small an amount) and fortunately got away.
This year, however, Manish is not ready to go to China anymore; well, almost. He now works through an Indian agent. The recession hasn't been great for businesses and he fears that even the Indian agent might not have paid up properly to the Chinese sellers (though Manish has paid his entire pending Rs. 37 lakh for his last imported container). The fear is that the Chinese sellers might again pounce on him. "It’s undoubtedly a fearful situation. The question of safety for the foreign trading community is totally missing despite us being such regulars and buying so much from them. There is no helpline. And they are just not ready to listen to our version. Someone messes up and someone else pays for it. The recent kidnapping has only brought to highlight the fears and trauma people have been going through for a long time despite doing big business there," he says, elaborating further. He says something more that has been haunting a lot of Indian professionals in Gurgaon of late, due to a new phenomenon I had outlined, again in a previous article of mine, on how Chinese companies are now doing business in India only when they are allowed to get Chinese workers here (in effect, easing out their employment problem through projects in India).
The grudge the people working in Gurgaon have – as they see scores of Chinese people all around them working on various projects – is that not only are we allowing Chinese people to take our jobs, we’re also accepting their behaviour to simply look down upon Indians despite working in India itself (rightly or wrongly, is another question of course). Manish says exactly the same, "We do so much trade in China but they just don't treat us with enough respect and that is a key reason behind this high handed semi mafia behavior."
Of course, the Indians and the system are also to blame. The Indian traders often place an order. But our customs department people at the docks often increase the demand for bribes irrationally. When the traders don't pay up – in order to teach them a lesson and to ensure that the next time, they meet their demands easily – our customs department doesn’t release the traders’ consignments during the festival season.
This makes the consignments more or less redundant – since one can’t foretell if the same clothes, designs or the same style will be in fashion through the next festive season. So the Indians don't pay the agents the remaining dues and the agent in turn often fails to pay his Chinese counterpart, creating a further commotion. The problem however is that it’s the Indian trader who starts suffering – and as of now, there are scores of traders like Manish Rewari who can't do without the Chinese products, their unbelievable prices and quality, and yet are fearing stepping into Chinese shores. Between the Indian authorities and the Chinese authorities, some kind of rules need to be outlined to make the lives of these businessmen easy. Just a warning declaring Yiwu as an unsafe place for trading is not enough since too much of business is dependent on such regions which today provide scores of Indian traders their source of profits and income. Of course the blackmailing power of the people at the customs must also be controlled so that scores of traders don't lose out on their businesses during the festive seasons time and again, year after year.
IIPM Prof. Arindam Chaudhuri on Between the Indian Customs Department and the Chinese "Kidnapping" Traders, It's the Indian Businessman Who Is Getting Sandwiched