He told Mrs. Gandhi that India and Mexico could become good business partners and, for this to happen, he advised Indian businessmen must learn Spanish and Mexicans Hindi. Navarette’s advice was not taken seriously by India, but China did to emerge as a top investor and trading ally of Mexico and other emerging Latin American economies, 20 years later.

The People’s Republic of China’s language studies department put big emphasis on learning Spanish and Portuguese alongside English, French, German, Russian, Korean, Japanese and Arabic, the world’s most popular international trade, investment, commerce and legal languages. Today, Chinese businessmen are everywhere in South and Central America boasting the reputation as being among the most favoured trading and financial partner in countries like Brazil, Venezuela, Argentina and Mexico, much to the discomfort to their traditional allies from the US, Canada, European Union and Japan. Lately, South Korea too is aggressively following the Chinese model to boost its export trade to high-spending emerging markets across the world.

Unfortunately, the business community of India, the former jewel of the British empire, is still most comfortable with the colonial language and is paying heavy price while concluding financial and commercial tie-ups with its Chinese counterpart without caring to know their language, legal issues and procedures, custom and culture. Without adequate knowledge of the Chinese language, main dialects, legal system, social culture and custom, it is nearly impossible to do business inside China as a sole or joint venture producer, service provider or trader to take profit out of China. Indian businessmen, particularly importers, having little knowledge of those key attributes, are attracted to China only for price consideration.

Interestingly, Mukesh Ambani, India’s biggest businessman, and his mega-corporation, Reliance Industries (RIL), seemed to recognise well the language and cultural constraints in dealing with China and mostly avoided intimate trade and business engagements with that country so far. Considering RIL’s existing product range, areas of operation and export thrust, the Indian petroleum and petrochemical giant considers China more as a business rival than an ally. Things may change as RIL has entered the telecom services with a bang. And, everyone knows that Chinese telecom gadgets are among the cheapest in the world.

In contrast, his younger brother, Anil’s business activities are deeply involved with China mainly because of the cost factor, importing cheap Chinese telecom gears, power plant equipment, easy and cheap finance, etc, to improve profitability of its highly competitive local businesses. The Adani group too is lured to strike big business deals with China also due to the price factor. Cheaper Chinese products – from power plants, telecom equipment, cameras, computers to low technology kitchenware, home decors and tiny safety pins — are flooding the Indian market. Thanks to Anil Ambani, China has made a forceful entry even in India’s lucrative real estate sector.

The challenges and pitfalls of doing business with China are many. They range from highly unconventional and even seemingly funny, if not utterly silly, business practices. They are not taught in India’s B-schools. Practices followed by some of India’s most successful business representatives in China, representing such high profile domestic enterprises such as TCS, Larsen & Toubro, Infosys Technologies, Aurobindo Pharma, Berger Paints, Thermax, State Bank of India and NIIT have been simply unique. Alongside those global Indian business entities there have been a few successful individual fortune-seekers, who made it big in China, like Janaki Ballabh, M H Pastakia and M Antony of Indian Kitchen, the richest Indian entrepreneur, with perseverance and grit. Shanghai, having an Indian population of around 4,000, has some 20 Indian restaurants, serving somewhat bland Indian dishes to suit mostly Chinese palates.

L&T’s Country Manager in China U Vittal Mallya had spent two years in a Shanghai university learning Chinese; his wife did the same. Arvind Chandak (of Aurobindo Pharma) has been in Shanghai for close to 18 years. According to him there is only one secret of success in doing business in China: one must know the local language. The Chandaks are also involved in a lot of community activities there. To do business in China, the social acceptance is important. But, that is easier said than done. Some are prepared to marry Chinese women for social acceptance.

Despite bureaucratic and policy hurdles, most existing Chinese firms in India did not take long to set up ventures here and enter the local market. The same is not the experience of Indian ventures in China. Barring Infosys, few Indian wholly-owned enterprises are doing well in the Chinese market. China encourages only such Indian ventures which use local workers and raw materials to export to India to earn foreign exchange for China. Orind Refractories, an early Indian bird in China, promoted by Singapore-based Ravin Jhunjhunwala, had vanished within years. Ranbaxy sold 83 per cent in its China firm to a state-owned company. So did Aurobindo (Datong) Bio-pharma, selling majority stake to the China National Pharmaceutical Group.

There are some 200-plus Indian ventures in China today, mostly feeding the Chinese economy as India’s import agents. China encourages only such Indian ventures from which it has something to learn. It is interested in TCS and Infosys for the local Chinese to master the art of devising advanced software solutions for its industry and services sector. Others face innumerable Chinese hurdles to earn success.

Even many generally favoured western enterprises don’t find doing business in China easy. RIL, a private Canadian investment firm, entered into a joint venture with the Village and Township Enterprise (VTE) in Shanghai in 1993. The Chinese manager had then allegedly obtained a power of attorney from the local county government without the knowledge of the Canadian co-promoter that gave him full rights to borrow money and mortgage the capital deposits of the company without the approval of the board of directors. Subsequently, he arranged loans in the name of the JV to repay personal debts which were owed to three local entities. Shanghai’s court had reportedly held these loans to be legal and forced the JV to repay these debts – which were equal to the company’s remaining capital. For outsiders, China could represent a cultural shock unless one is well versed with the local language, custom and commercial practices. (IPA)