Impact of Boycotting China Manufactured Goods
How banning Chinese products will impact the Indian economy and Indian citizens..!!
Hello, guys, I am Suraj mane, welcoming you all to my blog site.
As we all know the coronavirus crisis is getting worse day by day resulting in huge healthcare and economic breakdowns worldwide.
As of now while I am writing the blog the count of total corona virus-infected people in the world has reached 4.5 million (45,34,952) out of which 3,07,108 people have died and fortunately 1.6 million (16,33,185) people have recovered.
We all are suffering due to lockdowns all over the world which have stunted huge economies and till now except China nearly every country is in lockdown. It looks like the epicenter of coronavirus that is ‘Wuhan city’ which is situated in ‘Hubei province’ in China where it all started is now fully recovered and all citizens are going for work, the lockdowns are released and peoples are also allowed to travel and visit public places.
The Chinese officials stated that they implemented strict actions during the lockdowns which helped them in reducing the cases in China.
However, No one believes in the Chinese statements because of there traitorous behavior which always risks everyone by keeping harmful secrets. And this results in huge crises and sufferings worldwide. And despite that, the Chinese are not accepting their carelessness which has created hatred against china in the world.
And through such situations, the urge of boycotting Chinese goods are jumping in minds of peoples worldwide.
So I decided to take a look at how to boycott china goods will affect the Indians and the Indian economy, but before that let’s go through some important information.
Trade between India and China.
According to the “Embassy of India, E & C Wing, Beijing.”
The huge expansion of India-China bilateral trade since the beginning of this century derived china to emerge as our largest trading partner by 2008. A position which china continues to hold today.
Since the beginning, bilateral trade between both of the countries recorded aggressive growth in the year 2011, Which was reached up to US$ 73.9 billion, in just a decade.
Talking about the current situations, following the aggressive growth in trade, In 2019 the trade was in total recorded was about US$ 84.32 billion, from which the exports from India to China were of us$ 16.32 billion were as the imports from China to India was US$ 68 Billion.
And obviously, the imbalance of trade is on the side of India, resulting in the ‘Trade Deficit’ of around US$51.68 Billion, which is the highest trade deficit ever recorded with any country.
Reasons for Trade Imbalance
The trade between India and China has benefitted India by the availability of low-priced items in India (helping in the development and up-gradation in low-class peoples in India)
But it has also led to a huge trade deficit with the country. And the deficit is widening year after year.
This is happening because the commodities we export to China are very low, that the export from India is only of agricultural products mostly and some of pharmaceuticals products.
India exports raw material commodities such as cotton, copper, diamonds and natural gems but these commodities are overshadowed by the Chinese exports of types of machinery, power types of equipment, Telecomm products (Mobile phones, gadgets, etc.), organic chemicals and fertilizers, which are huge in the amount as compare to the amounts of goods that India exports to China.
Impact of Boycotting China Manufactured Goods
Products traded between both countries.
- The Indian exports include Ores, slag & ashe (stony wastes), Natural pearls, Precious stones and metals, cotton (including yarns and Woven fabrics), Fish & Crustaceans (crabs, lobsters, shrimps, etc), Molluscs (snails, slugs, octopus, etc) and other aquatic animals.
- The Indian imports from china include Electric machinery, Sound equipment, TVs, Components, Nuclear reactors, Modern mechanical appliances and parts, Plastics, Iron, Steel articles, etc.
Impact of boycotting Chinese products
If we Indians boycott the Chinese products which every Indian wants, It will impact on both the sides of trade that is imports as well as exports.
The goods that India imports from China are only 2% of the total goods that China exports to the world, So even if India boycotts Chinese goods, It might not affect china as much as we think.
According to reports published in ‘Economic Times’ & Articles in ‘Indiatv news’.
It can be seen as some of the Indian sectors can have adverse effects like:-
- Pharmaceuticals sectors in India are seriously dependent on the goods imported from China as the drug manufacturing companies in India import up to 80% of the antibiotics. So firstly boycotting Chinese goods will sway the medicals supplies in India.
- As we are going digital everyone needs to carry a smartphone with themselves and electrical accessories, which are made available in low prices by Chinese manufacturers, has resulted in over 70,000 crores of imports which will if banned results in a hike in the prices of the previously supplied products resulting in the shortage for choosing which will be inconvenient for the middle class or low-class people, However, It may encourage the Indian manufacturers to manufacture purely Indian electrical equipment, gadgets, and phones and may rewake the Indian companies like- LAVA, Micromax, Karbonn, Intex, Spice, etc. Which are often treated as ‘Chinese Maal’ means Chinese products although being Indian Brands..!!
- As India also exports goods to china which is about US$ 16 Billion this income also can be decreased as china will retaliate on the actions of India by holding India’s exports to China. However, boycotting is not a useless idea though, It may help India in achieving long term benefits.
Why we Indians don’t buy or promote the Indian brands that are trying to compete with Chinese brands?
Well the Indian manufacturers are not consistent, (here I’m targeting the electronic markets as most of the volatility is observed in this markets of India)
We are exposed to the latest technologies introduced by Chinese manufacturers. Well, if you see, the Chinese export their latest technology products to India at very cheaper prices compared to another manufacturer over the world with the latest specifications which encourage us to buy the products which fit in every budget of every person. But when we do this our expectations are uplifted for a product of certain price range and this impacts on the Indian manufactured products because India has started entering into such markets where the china has already set their hands-on, So when the Indian products are just entered into the market, we start comparing them with readily existing properly improved brands and this is what results in people preferring Chinese brands over Indian brands.
This demotivates the Indian manufacturers as they don’t get sufficient chance to provide such qualities in cheaper prices at the initial stage of their business and this some how forces them to exit the markets.
The Indian brand ‘LAVA’ a phone manufacturing company which was founded by Hari om Rai, Sunil Bhalla, Shailendra Nath Rai, and Vishal Sehgal, formed in 2009, was in boom with an annual turnover of US$ 1.2 Billion by 2016,
But thereafter we even don’t know about their existence because from the year lots of Chinese brands entered into markets like Xiaomi, Oneplus, Oppo, Vivo, etc, which made available flagship-like phones in the very cheaper price range.
You may argue that this has benefitted the middle-class or low-class people who were able to buy these products and increase there standard of living. But in the long term, this was not good for our economy as the trade deficit has widened because of huge imports of Chinese products in India.
We as Indians never understood the economic impacts and started using such products and because of which Indian manufacturer was not able to grow or research as there were readily available components and products available, which are supplied by china.
Do you know?
In terms of human resource our country, India grabs the advantage of having highly literate and very skilled and driven young people, India has the huge number of young, highly literate and English speaking workforce which values more in the global level as compared to Chinese young workforce, and this is becoming India’s strength.
But, because of fewer infrastructures and very scanty numbers of programs that are run by the Indian government cannot make our professionals survive in our country hence, to grow their career they have to move out of India and work for foreign countries.
What can India do here?
If you take a look at the Chinese government you will notice that they focus on making strategies and develop a clear vision to sell their products worldwide.
The government of china focuses on uplifting people from poverty and they know that only the exporting economy can grow in a very short period. That’s why China is the ‘No.1 Exporter’ in the world with total exports amounting to about US$ 2.06 Trillion annually.
India also needs to set up and develop new exporting companies, as well as provide proper incentive schemes and focus on electronic and I.C. (Integrated Circuits) fabricating plants and encourage Indian manufacturers to upgrade their plants and help them by providing them special allowances from tax deductions at initial growing stages as well as make the loan procedures/paperwork dutyfree and easy legal operations. So they can set up their business without hesitating and confidentially.
The Indian government also need to educate citizens regarding use of Indian brands by explaining to them how it will benefit them as well as Indian economy in long term by arranging special campaign and encourage the skilled and creative people to make them develop new business or export business options and enter the markets by availing incentives provided by the government to manufacture and export their products worldwide and reduce our dependency on China.
This will not only reduce the dependency on china but will also help in the growth of the Indian economy as well as it will generate huge employment and also recover the trade deficit with China as well as other countries.
This is a proper time where India should start taking actions because at present every country is against china and wants to reduce their dependency on china but they are helpless right now as the majority of the manufacturing unit is in china and china exports huge amounts of goods to the whole world, but if India plays this opportunity then everyone will shift to India and then after India has the caliber to become the core exporter to the world.
Recently trending activities which are a great opportunity for India
According to a report published in ‘Nikkei Asian Review Report’ recently,
Says that most of the popular companies like Apple, Google, Microsoft are going to shift their production lines out of china, for reducing their dependency on china, even South Korean and Japanese companies are also planning to shift in Vietnam and Thailand like Asian countries rather than Indian.
Why companies shifting their units from china are more willing to shift in Vietnam or Thailand?
India is the world’s 5th largest economy with a nominal GDP of US$ 3 Trillion.
Despite being a developing market and a beneficial destination for investments, It has been observed that the companies exiting china are planning to shift their setups to a relatively smaller economy that is ranked at 45th position in the world which is ‘Vietnam’.
This is because,
Firstly, the infrastructural developments in Vietnam are far better than that of India, Due to which corporates find it easier to set up production in the country.
Vietnam has made huge investments in developing and upgrading its healthcare and education systems. Vietnam invests around 7% of its GDP only on healthcare and education systems,
Whereas, India’s total expenditure on Human capital is 7.5% of the GDP, despite being 5th largest economy in the world this is very low as compared to needs.
Secondly, India has flexible exchange rates, Vietnam’s currency that is ‘Vietnamese Dong’ is relatively more stable as compared to Indian currency that is ‘Indian Rupees’. And because Indian currency is volatile which keeps on fluctuating its value very quickly, the companies exiting from china don’t want to enter into a country with such an exchange rate rattle.
Third, there are approximately 12 procedures required to be completed to initially set up a business in india and this consumes around 27 days on average with huge costs.
Whereas, there is a total of just 8 procedures required in Vietnam and that too with very low cost and less time.
However, India is also increasing the ease of doing business and promoting the entrepreneur development programs as well as introducing special schemes for FDI (Foreign Direct Investments), But still, it will take some time.
So I think these are the major things that Indian government should focus on as well as, We Indians have to understand that before boycotting Chinese products we have to raise other options that will take place of the Chinese products for that we have to encourage the Indian brands by allowing them to serve us and gain feedback that will help them grow up so that they can also be able to research and develop their products and become strong competitors of China.
I hope you liked this blog, do SHARE if you find it worth sharing & please let me know what are your views about this topic in the comment section below…
Your every comment will encourage me to create better content and constantly improving them..!!