Indian Prime Minister Manmohan Singh, left, meets Chinese Premier Li Keqiang in Beijing, Oct.23. (Photo/Xinhua)
Despite an enthusiastic pitch from the Indian government and handsome market potential, Chinese entrepreneurs still prefer to wait and see before committing to investment in India, as painful memories are still fresh in their minds.
In May, China's premier, Li Keqiang, proposed the establishment of a Chinese industrial park in India to Prime Minister Manmohan Singh during his visit to India. On his visit to Beijing Oct. 23, the Indian prime minister officially announced the plans had been given the green light.
The deal followed on the heels of overtures to Chinese investors by India's municipal governments, organizing investment road shows in China in recent years urging Chinese entrepreneurs to invest in their municipalities. During a recent investment road show in Guangzhou, officials from Madhya Pradesh state in central India, for instance, invited 100 Chinese businesspeople to visit their state to inspect the investment climate, with the state government bearing all the costs of travel and accommodation during their stay. The state government pledged to provide handsome incentives, including provision of a large area of low-cost public land, to prospective investors.
Guangdong entrepreneurs reacted cautiously to the invitation by the government of Madhya Pradesh. Tang Ruijin, executive chairman of Shenzhen Mobile Communication Association, pointed out that it remains to be seen whether India's promises of a Chinese industrial park will materialize, particularly the measures concerning export/import tariffs, product inspection, and health and safety.
"For all their interest in investing in India, many entrepreneurs are still concerned about the administrative efficiency and integrity of the Indian government" said Liu Yan, deputy secretary general of the Shenzhen sub-council of the China Council for Promotion of International Trade.
Labor issues are a major headache for Chinese businesses in India, as Indians spend lots of time on religious worship and never work overtime, a practice backed by the nation's strict labor laws, a businessman with failed investment experience in India remarked to the Guangzhou-based Time Weekly.
The quality of laborers is another problem. "India lacks a class of experienced laborers and Indian workers are prone to make errors during production," complained a businessman with experience building a factory in the country.
"Prospective Chinese investors will face multiple problems in India, including substandard infrastructure, as well as various challenges including knowledge about India's business laws and regulations, ability to communicate with Indians in English, and knowledge about and respect of Indian folklore, culture and traditions." Chuan Heng, deputy director of the Institute of Economics at the Shanghai Academy of Social Sciences, told Time Weekly.