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Chinese Companies Try to Solve their India Problem

Posted by: Bruce Einhorn on May 9, 2010

As China’s two biggest makers of telecom equipment, Huawei and ZTE, try to get New Delhi to reverse its policy prohibiting Indian companies from buying their Chinese-made products, smaller companies from China have problems of their own in India. The government late last year took steps to stop a flood of Made-in-China phones entering the country. The phones are made by the so-called shanzhai, or bandit, manufacturers. These companies specialize in producing inexpensive, no-name phones; Indian partners often import them and slap on a local brand name. Over the past few years, Indian sales of these gray-market Chinese-made phones have soared; they accounted for 30% of the Indian market in 2009, says Flora Wu, an analyst in Beijing with consulting firm BDA China. That’s 40 million handsets, up from almost zero in 2007.

Problem is, many of these shanzhai companies don’t put International Mobile Equipment Identity numbers on their phones. Given the way the terrorists who attacked Mumbai in 2008 used cell phones to communicate, having tens of millions of anonymous cell phones in the country creates a major security threat. So last year the Indian government began forcing operators to disconnect phones without IMEIs. That change - as well as the latest moves against Huawei and ZTE - may be leading some Chinese companies to rethink India. Instead of exporting from China, why not produce locally? Like the Japanese automakers that started manufacturing in the U.S. in the 1990s, thereby disarming some of their strongest nationalist critics, the Chinese might be able to win friends in India by investing in the country, creating local jobs and helping to build a local supply chain of manufacturers. One sign of possible things to come: According to the Indian newspaper the Business Standard, China Wireless Technology, a handset maker in Shenzhen, wants to open a factory in India and boost the number of Indian employees from current 200-300 to 1,000. The paper cites Managing Director Sami Al-Lawati saying “we plan to set up a manufacturing facility in 2012.” Expect more reports like this in the months ahead.

Reader Comments

Husin O'Bama

May 10, 2010 8:24 AM

There is no hope. Just send it over to the West for re-labelling, and then export it at a higher margin to the Indians.


May 10, 2010 1:21 PM

If other countries can and do do things like restrict imports why don't we??????

reputation and quality

August 6, 2010 3:23 PM

In INDIA, Japanese and Euro products have the best reputation for quality, but known to be expensive, while Korean and Indian products are cheaper yet regarded as acceptable quality.
CHINESE stuff is reputed to be dirt cheap but expected to fall apart after minor use.


August 9, 2010 11:15 PM

Yes, sell them the rope that they need to hang themselves with.

@ Reputation & Quality

August 12, 2010 12:49 PM

Wow, Korean & Indian products are cheaper yet regarded as acceptable quality, what Indian products are you talking about, please enlighten me. Where can I buy a Indian made flat panel
TV & computer.

Indian, always what to piggy ride with someone, like Chindia!
Now you what to piggy ride with Korean product, give me
a break.


August 13, 2010 4:05 AM

It's all about quality vs price. The chinese can make products on a wide range of quality, and sadly most importers choose the cheapest hence the poor quality ones (to max their profits). Brand building takes time and effort, which most small companies or entrepreneurs are reluctant to invest in. What indian companies should do is to choose reputable chinese producers and make sure that proper quality control is in place to monitor.


August 21, 2010 8:41 PM

Yes the Chinese can sell us some rope. We first tried ordering it from some american company's but were told that they didn't have the expertise to make rope.

Haroon Rashid

August 24, 2010 4:41 PM

The IMEI issue is not with ZTE, Huawei they are vigorously very quality conscious companies conformance to international standards. Yes, there are several other companies in China which are or which may be involved in the un-fair practise they should strictly be curbed, and access not be allowed to export.

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