Since there are some controversies among India and the neighbor China in the sharing of border, the Chinese automobile companies were planning to establish their business in Indian Markets. Indian government already conducted two seminars focused on the automobile sector as a part of its Make in India program in two Chinese cities.
The companies expected an investment of $51 billion in the country and thus India is trying to access Chinese FDI, curb imports and boost local production. The response to the Make in India seminar has direct reflections. At the time of conducting the seminars Chinese automobile companies sent over 180 representatives to participate in those seminars.
In the financial year $ 278 million Chinese FDI entered in India and 60% was in the automobile sector. SAIC Motor Corp, which first looked at India in 2010 through a partnership with General Motors (GM) but exited prematurely will expected its re entry. Growing up in the shadows of global MNCs like Volkswagen and GM, Chinese automakers are finally now breaking free and thinking big.
China becomes the largest car market in the world by selling nearly 28 million cars in 2016, compelled global MNCs to operate only through 50:50 joint ventures with local Chinese firms. This government policy has helped local Chinese firms gain knowledge and build technology to eventually stand on their own feet and launch their own portfolio of cars.
The Indian passenger vehicle market is found as one of the fastest growing by over 9% in 2016-17 and is projected to be the world’s third largest car market by 2020, so it’s clear why the Chinese companies approach Indian Markets.
Since brand reputation and credibility are important in Indian Markets, Chinese products do suffer from a traditional poor quality consumer perception.Besides, India isn’t an easy country to crack for other countries. Chinese automaker Beiqi Foton must have learnt it firsthand. The company announced its plans to expand into India in 2011 and bought 250 acres in Maharashtra to set up its plant. It planned to acquire another 1,250 acres to build an industrial park for suppliers. It has since run into a wave of resistance. Six years later, its plans are still hanging fire. While it remains committed to building its India operations, it has shifted focus from commercial vehicles to passenger vehicles. The competition from dragon country can’t be underestimated though.
The Indian government has announced it
wants India to go all electric by 2030. The electric vehicle push will give
Chinese companies an upper hand.China is today the world’s largest electric
vehicle market, having sold 3.52 lakh units on the back of a government policy
push and generous subsidies. By 2020, the Chinese government wants 11% of its
domestic sales to come from electric vehicles.