New Delhi: The Indian embassy in Beijing Tuesday warned domestic small and medium enterprises (SMEs) to “adopt adequate precautions” when doing business with Chinese companies.
The advisory comes days after external affairs Minister S. Jaishankar met with his Chinese counterpart, Wang Yi.
The Indian trade advisory said: “The embassy has regularly come across several problems faced by Indian companies doing business with Chinese entities in China. It is requested that Indian companies take note of this advisory and its annexure documents and adopt adequate precaution while dealing with Chinese entities.”
The mission had observed that the majority of trade dispute cases involved companies registered in the Shandong, Hebei, Guangdong, Jiangsu and Zhejiang provinces, the advisory added.
“Therefore, Indian companies are advised to take extra precaution before trading with companies from these provinces.”
Jaishankar and Wang met on the sidelines of the ASEAN-mechanism framework on 25 July in Laos, their second meeting in the month. The two ministers had spoken in Kazakhstan on the sidelines of the Shanghai Cooperation Organisation (SCO) summit. India has made it clear that China must accept the Line of Actual Control (LAC) and past agreements for the normalisation of ties.
The political relationship between New Delhi and Beijing remains tense after the Galwan clashes in 2020. Jaishankar, while in Tokyo Monday, said that India-China relations were “not doing very well” currently, since the issues surrounding the LAC and Galwan had not been “fully” resolved.
Despite political tension, trade between the two countries has increased in the past few years, with business in goods crossing $100 billion in 2021-22. In 2023-24, China pipped the US to become India’s largest trading partner. The total value of goods traded between India and China in 2023-24 stood at $118.4 billion. India imports more from China than it exports. The deficit in the trade balance stood at $85 billion in 2023-24.
The advisory by the embassy warned Indian importers of issues they may face from Chinese firms such as receiving sub-standard products, supply of sand, stones and rocks in place of chemicals or silicon carbide.
Other issues included the refusal to send shipments after advanced payments, or hiking prices on the grounds of COVID-19 or other such reasons after the contract is signed.
For Indian exporters, problems include non-payment after taking control of the consignment, or refusal to take delivery of items exported if market value has fallen below contractual prices.
“In case of large transactions, it is highly recommended that Indian companies may consult a business service company which can provide a report on the business transparency, financial health, reputation, reliability and credentials of the Chinese entity,” said the advisory.
The advisory also mentioned common types of challenges faced by Indian SMEs with regards to dealing with Chinese entities and their modus operandi.
(Edited by Tikli Basu)
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