Can China and India still be business partners despite territorial row in Himalayas?
Hu Jianlong writes that economic cooperation between the two emerging markets is deepening, even as nationalism flares on social media
It is over one month into the stand-off between China and India in Donglang, or Dokalam as the area is known in India. The troops of two countries are mired in an eye-to-eye confrontation while round-the-clock media reports fan mutual antagonism. Fermented nationalism is felt in both China and India.
Last week, a video clip went viral on Chinese social media. It showed a group of Indians demolishing the signage of Chinese mobile phone brands Vivo and Oppo. Many Chinese have taken the clip as concrete proof that a carefully orchestrated campaign against Made-in-China products is under way across India. Unfortunately, or fortunately, the reading of this video is wrong. The video was shot two months earlier. It has nothing to do with resentment towards Chinese brands. The incident is sparked by the friction between mobile store owners and the local tax officer in Pune, a city at the centre of India.
There is no indication that a boycott of Chinese products is occurring across India despite sporadic reports that students in a few Mumbai schools were encouraged to avoid China-made stationaries. Indian media houses are keen on filing adversarial stories about China, similar to how China’s state-controlled media incite populist sentiment when Beijing faces challenges in dealing with other nations.
However, it should be stressed that the ongoing territorial row in the Himalayas has not rippled across the business community of China and India. Instead, economic cooperation between the two emerging markets is deepening, despite the standoff.
InMobi, a mobile advertising startup based in Bangalore, held its first Chinese developers conference in Beijing. One of India’s 10 “unicorns”, or startups valued at over US$1 billion, the company announced break-even results this April partly thanks to its booming business in China, its second-largest market after the US. Helped by its China presence, InMobi reported a profit of US$8 million to US$10 million for 2016.
In tandem with InMobi’s event in Beijing, Vijay Shekhar Sharma, founder and chief executive of Paytm, addressed audiences on the sidelines of Alibaba’s Global Netrepreneur Conference in Hangzhou, China. Paytm is India’s largest fintech platform and Alibaba is a majority stakeholder in Paytm’s holding company. (Editor’s note: Alibaba owns the South China Morning Post.)
Chinese tech companies had poured US$3.2 billion into Indian startups from 2015 to 2016, two times more than the funding Indian startups raised from US enterprises, according to AVCJ Research, a Hong Kong-based firm.
Besides, the Indian market is playing an increasing role in Chinese mobile phone vendors’ global strategy. Lei Jun, the founder of Xiaomi, announced a 70 per cent increase in second-quarter smartphone shipments compared with the first quarter of this year. Xiaomi’s performance could be less stellar without India, which accounts for 67 per cent of Xiaomi’s smartphone sales outside China.
With India’s investment inflows from China growing and China’s stake in India growing, closer economic ties between the two Asian giants are reshaping diplomatic relations. For instance, while Beijing was criticising India over the Dalai Lama’s April visit to a disputed region, Indian Prime Minister Narendra Modi was shaking hands with Xiaomi’s Lei.
Indian officers have learned to exercise pragmatism in dealing with China. While the border standoff simmered, a spokesperson with India’s home ministry declared that New Delhi has no plan to hold up Chinese investments for security reasons. “It is not under any consideration. Such issues are dealt with [with] a great deal of maturity by the concerned agencies at the appropriate level,” he said.
This stance points to the maturity of a bilateral relationship that is nourished by growing business deals, especially in the last decade. Economic bonds have generated a fundamentally different context for Sino-Indian relations compared with the days of 1962 when the two armies clashed.
Chinese and Indian military personnel both assert that their countries are different from what they were in 1962. They are right. Globalisation in the last half a century has changed them and created many shared interests. In 1962, trade flows between China and India barely existed; in 2016, they came to US$70 billion.
China and India inhabit a different neighbourhood now, as neither friend nor enemy, but business partners.
Hu Jianlong, a Fulbright/Humphrey Fellow in 2015-2016, is an entrepreneur and a freelance writer based in Bangalore, India