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To Buy or not to Buy Chinese

If you are an avid user of Social Media, you would have been inundated with
messages to boycott Chinese goods for the past few weeks. There were few
messages asking the Government to ban imports from China. The answer to that
is we cannot impose a blanket ban on the imports from China. If you are
wondering why, according to WTOs (World Trade Organization) international
trade rules, we cannot ban imports from a country. Here is what our Union
Minister of Commerce, Nirmala Sitharaman said while answering to the queries
of few Lok Sabha members during the question hour in the month of April 2016,
A complete ban of import from any country is not possible under WTO (World
Trade Organisation) rules just because we have problems, diplomatically,
territorially or militarily.

It is a no brainer that the friend who is sharing such messages hasn't even
thought if he/we can completely boycott Chinese goods. No, I do not doubt his
patriotism. The impact of the awareness created by such messages was
humongous. It was evident when I spoke to few shop-keepers in my
neighbourhood. They said, customers specifically asked for crackers and/or diyas
that were made in India. Except for few, everyone made it a point to ask the
shopkeeper about the country of origin.

Now, the question is can we completely avoid buying Chinese products?

For the moment lets look at things from my reference frame. I am writing this
piece on a Vaio Laptop which is Made in China.

The tablet I use for surfing and researching is Samsung made and assembled in
China.

My internet connection is provided by Tata Docomo photon max Wi-Fi pod. The
device has been made by the Huawei in China having a 60 per cent market share
in India and 55 per cent globally.

I use the Samsung Galaxy mobile phone, a Korean brand but Made in China.

I own a basic Hewlett Packard printer which is again Made in China.

I own a Sony television assembled in China.

Not surprisingly, in 2015-2016, approximately 37 per cent of Indian imports from


China constituted of electronic products. Next came Engineering goods at nearly
29 per cent and chemicals came in third at roughly 18 per cent.

So, if we want to hit China hard, then these are the goods which we should avoid
importing from them. In total, they add up to a staggering 84 per cent of Indian
imports from China.

Can that be realistically possible ?

Lets work out a few everyday hypothetical scenario. Lets say you want to go out
somewhere. You decide to call an Ola or an Uber taxi. There is a high chance that
you will be doing this using a Made in China phone. In 2015-2016, approximately
16 per cent of Indian imports from China were telecom instruments.

Even if you manage to avoid that, chances are that some component of the
phone would be Made in China. There is no way of knowing the same. This is
principally because nowadays MNCs manufacture products using global supply
chains. The World Trade Report for 2013 clearly points out that a central feature
of the age of globalisation is the rise of multinational corporations and the
spiking of foreign direct investment (FDI). Greater than two-thirds of world trade
now takes place within multinational companies or their suppliers which
reinforces the growing importance of global supply chains.

Further, the battery of the phone used to call the taxi is charged through
electricity. There is very high probability that the electricity used to charge the
phone has been produced using equipment imported from China, using loans
provided by the Chinese banks. Electrical machinery formed upwards of 4 per
cent of Indian imports from China in 2015-2016.

Coming to the radio taxi called, if you call Ola, the fact is: Ola is in alliance with
Didi Chuxing, a Chinese taxi-company with whom they have entered into a non-
compete clause. If you call Uber you will be using Paytm to pay the taxi driver.
The Chinese company Alibaba is the major investor in Paytm. So paying
electronically is out of question.

The other alternative is paying using cash. So you go to an ATM to withdraw


cash. Chances are the ATM machines will be in Made in China. So now you go to
a bank branch to withdraw money. Theres high chances that the computer used
by the teller to give you cash is also Made in China.

You dump the whole idea of going out and better decide to stay at home since
we don't want to encourage Made in China. Let's order an American Pizza say
from Dominos or Pizza Hut.

From wherever you buy your pizza, the Pizza will have cheese and cheese is
made from milk. In 2015-2016, industrial machinery for dairies formed
approximately 5 per cent of Indian imports from China. In that case, its highly
probable that that cheese also has Made in China inputs.

Lets say you do away with the idea of putting cheese and decide to get Pizza
bases from the market and make one for yourself at home with tomato ketchup.
Now a Pizza base is made of wheat and modern day farming uses a lot of
fertilizers to help grow wheat and other food grains. In 2015-2016 fertilizers
(phosphatic and potassic) formed upwards of 5 cent of Indian imports from
China.

You decide not to brood so much and just to order and eat the Pizza. After eating
the Pizza you feel a little groggy. You pop a tablet. Interestingly, medicinal and
pharmaceuticals (majorly bulk drugs and formulations) formed nearly 4 per cent
of Indian imports from China in 2015-2016.So chances are that the drugs that
have gone into the making of the tablet have been sourced from China. Even if
otherwise, there is no way the same can be figured out.

So how do we genuinely avoid Made in China? Let's say we boycott Chinese


brands. So you dump Huawei wifi data card and left with only other workable
option like ZTE which is again Chinese. You don't buy a China assembled Sony
television and settle for an LG or Videocon set. Basic panel of even these
televisions are imported from China though the rest is assembled in India. If we
have to dump a China assembled Samsung mobile, we can settle for Redmi 2
Prime, Redmi Note Prime and Redmi Note 3 all assembled in India. But there is
no way we can know so easily if any component of any of above models
originates from China via global supply chains.

So where does that leave us? It leaves us with Diwali lights and crackers. Make
sure you buy Indian brands this year ie., earthen lamps and crackers made in
Sivakasi (and not Made in China).

While cases of certain Sivakasi fire cracker bizmen getting their stuff Made in
China is an open secret, there is no way of knowing the same before opening the
packet.

And how much will a boycott of lights and crackers hurt the Chinese? A pittance.
But not something that they can't bear. Lights and Fire crackers after all are low
value products at the end of the day.

So how can we really hurt China? The solution lies in ensuring that the
government creates and fosters an environment where Indian manufacturers can
compete with their Chinese counterparts. And that is not going to happen all so
soon !

http://economictimes.indiatimes.com/news/economy/foreign-trade/india-banned-
import-of-milk-some-mobile-phones-from-china/articleshow/51977430.cms

http://indiatoday.intoday.in/education/story/india-bans-import-of-goods-from-
china/1/652698.html