sino indo business digest q1-2016

SINO-INDO BUSINESS DIGEST Q1-2016 Issue

A CEIBS MBA Students and Alumni initiative

Sino-Indo Business Digest Q1-2016

CEIBS MBA Students & Alumni Initiative 2

CEIBS Indian Alumni and the Indian student body presents the Sino-Indo Business Digest, a quarterly mis-sion to assimilate information, knowledge and, most importantly, wisdom about doing business between India and China. It promises to bring forth the latest trending news and opinions on trade, commerce and related policies within and between both the countries. The Q1-2016 issue starts with a debriefing of the 2016’s First Indian Alumni & Career Mentors Meet; written by Yashasvi Nahata and Kunal Daga, our in house writers. The event marks a key milestone in strengthening the bond and the relationships between CEIBS Indian Alumni and other Indian organisations in China. This edition then moves on to the various opportunities Chinese firms are exploring in India and how the Indian government is trying to attract these foreign investments. News snippets by Kunal and Shantanu Pendse (guest writer from Indian School of Business, Hyderabad) explore these opportunities in depth. The Opinion section features Divya Joseph’s brilliant comparison of China and India’s past, present and fu-ture to determine the real measure of progress and possibilities. The issue concludes with Kevin’s deep and personal exploration and experience sharing of being an entrepreneur in both the countries. We sincerely hope that you enjoy this issue and share it within your own network. Your suggestions and feedback are most welcome. Regards, Editorial Team for Q1-2016 Edition Karishma Choudhary, Kunal Daga and Sushant Gupta

#intro

Contact us

NAME ROLE/DUTIES EMAIL

Yashasvi Nahata

Sukhdeep Virk Event Management Team

[email protected]

[email protected]

Karishma Choudhary

Sushant Gupta Publications Team

[email protected]

[email protected]

Kunal Daga Administration & Ops. [email protected]



On 12th March 2016, ‘CEIBS Alumni - Indian Chap-

ter’ organised a Panel Discussion on Managing Busi-

nesses and Career Prospects for expats in China at

the China Europe International Business School

(CEIBS)’s Shanghai Campus. The panel comprised of

esteemed corporate leaders – Rangarajan Vella-

more, CEO at Infosys China, GK Sukumar, Senior VP

at IBM China Global Delivery, Amit Waikar, Sr. VP-

Sales Asia Pac at DöhlerGroup and President of Indi-

an Association (IA) Shanghai, and Ramesh

Salagrama, Head of Program Management APAC,

Fiat-Chrysler Group. The discussion was moderated

by Prof. Ramakrishna Velamuri – professor of entre-

preneurship and academic director of the Centre

for Entrepreneurship and Investment at CEIBS.

The discussion commenced with opening remarks

from each member. While Mr. Rangarajan de-

scribed success in career building as the courage

mustered from various failures, Mr. Sukumar

stressed the importance of pushing out of one’s

comfort zone to develop this courage. Drawing

from his personal experience, Mr. Ramesh illustrat-

ed how day-to-day problems can be tackled more

efficiently by a structured problem solving approach

and how this could go a long way in developing a

successful career. Mr. Waikar took a pragmatic

view, encouraging students to dream big and mak-

ing the right connections to help realize those

dreams.

Moving onto more tactical advice, Mr. Rangarajan

demonstrated the value of being a subject matter

expert, especially in China and all members unani-

mously agreed on the importance of learning the

language and imbibing in the local culture – not as a

must have per se but as a good-to-have tool that

reflects one’s respect for the culture and in turn

commands respect. Although they all did agree to

the fact that language expertise is underscored by

domain expertise and that companies looking to

hire international students are looking at domain

#events Success, struggle and strength – main themes of the First 2016 Indian Alumni

and Career Mentors Meet at CEIBS

By Yashasvi Nahata and Kunal Daga



expertise and not language. Mr. Waikar advised on

choosing the right industry among the many

‘shining stars’ in China as China undergoes a tecton-

ic shift from being a ‘low cost’ manufacturing centre

to a ‘high quality’ innovation centre.

After an hour and a half of this engaging discussion,

the floor opened to comments from students and

Alumni. Rahul Bagde, Senior Manager - APAC/

JAPAN Fulfilment at Microsoft, commented that pa-

tience and perseverance are important in seeking

the right career opportunities. Vijay Menon, AP IT

Strategy & Communications at Ford (China), advised

that sticking to one’s domain expertise is essential

to find a satisfying work profile in long-run. Muthu-

raman Kathiresan, Consumer Insights Manager at

AB InBev (China), emphasised on exploring all possi-

ble scenarios and widening the horizon to be open

to all sort of possibilities. Mayand Singh, Delivery

Manager – Lincoln IT Program at Ford (China), re-

marked that the biggest asset students have is their

alumni and encouraged them to reach out to each

and every alumnus for opportunities at work and

business. Ananth Nagrajan, Business Model Innova-

tion Manager at Baxter (China), steered the discus-

sion towards entrepreneurial opportunities for Indi-

ans in China which attracted very keen interests

from the panel which agreed that many Indians who

have been working in china for long are now in

different stages of starting their own start-up here

and that the breed of Indian entrepreneurs from

china business has moved away from a simple im-

port-export trade to more technically intense ser-

vices in catering to growing domestic demand in

China.

The event also facilitated the launch of this maga-

zine, which received accolades for being a right

move in a much needed direction. Panellists mutu-

ally agreed for the need of such events in the future

and for a stronger institutional bond between CEIBS

and their respective organisations to facilitate sym-

biotic exchange of business acumen.

The event was a brainchild of Prof. Ramakrishna Ve-

lamuri, who also invited the esteemed panel, and

was organised by student body comprising of MBA

2016 and 2017 students, namely - Karishma

Choudhary, Kunal Daga, Sukhdeep Virk, Sushant

Gupta and Yashasvi Nahata, with immense support

from Verena Kohleick and Lee Zhang of CEIBS Alum-

ni office.

From the left: Prof. Velamuri, Mr Waikar, Mr Sallagrama, Mr Sukumar and Mr Vellamore



Chinese heavy equipment major Sany Group on Saturday said it

plans to ramp up its presence in India and will be taking its

overall commitment in the country to Rs 6,838 crore over the

next decade.

"We have already invested $100 million (nearly Rs 683.8 crore)

in our plant in Pune and are looking at taking our investment in

the country to the tune of $1 billion over the next 10 years,"

Sany Group President Tang Xivguo said.

‘Make in India Week’, a recent flagship event of Indi-

an government’s continued efforts in attracting man-

ufacturing projects into the country, was held in

Mumbai in the week of 13th Feb’16 . The multi-

sectoral industrial summit witnessed 2500 interna-

tional and 8000 domestic delegates, foreign govern-

ment delegations from 68 countries and business

teams from 72 nations. 17 Indian states (provinces)

also held their own expos. Throughout the week, the

event had witnessed over US$220 billion worth of

MoUs. Maharashtra topped other states buy netting

US$120 billion of MoUs.

THE CHINDIA ELEMENT

The week had also witnessed the participation of

some important Government’s delegations from

China which included the Suzhou Government Dele-

gation, led by its deputy mayor Yu Xingnan, the Hu-

nan Government Delegation and the China Associa-

tion for Pro-

motion of

International

trade. "In

recent years,

China has

begun its economic restructuring, which means that

it has to transfer some of its manufacturing capacity

overseas due to ever-increasing internal costs," said

the Consul General of the People's Republic of Chi-

na (Mumbai), Zheng Xiyuan in a note. "As a vital

country along the Silk Road, India is gradually be-

coming one of most attractive investment destina-

tions for Chinese companies" he concluded.

Official campaign logo

Sany’s Pune Plant

Sany kick starts the Chinese heavy machinery investments in India

By Kunal daga

China stands strong by Modi’s ‘Make in India Week’

By Kunal Daga

#news



In a fillip to Indian Prime Minister Narendra Modi's am-

bitious 'Make in India' initiative, over 100 top Chinese

handset and component manufacturers gathered in

New Delhi on 17th Feb’16, in what could bring $2-$3

billion investment in Indian mobile manufacturing oper-

ations in the next two years. Top officials from major

Chinese companies such as Techno, Gionee, Coolpad,

Holitech, Wingtech, Camera King, Galaxy Core, Poxiao,

Vivo and Sprocomm participated in the first-ever sum-

mit titled "China-India Mobile Phone & Component

Manufacturing Summit," in the capital city to explore

avenues to tap existing and emerging opportunities.

In the October -December 2015 quarter, 25.6 million

smartphones were sold in India, based on units shipped

from vendors, a 15.4 percent increase from the same

period in 2014. For the first time, India crossed the

milestone of a 100 million units sold in a year, in 2015,

according to IDC.

Chinese vendors boosted their sales in India by 71 per-

cent in the Q3 of 2015, Jaipal Singh, a market analyst at

IDC said in a press release. China-based smartphone

companies, including Lenovo, raised their market share

in India from 15 percent in the Q4 of 2014 to 22 per-

cent at the end of Q4 of 2015. Indian smartphone mak-

ers, on the other hand, saw their share slip from 43 per-

cent to 38 percent.

The idea that China’s internet giants could play a

larger role in India took hold last year with the arri-

val of Alibaba, the Chinese ecommerce giant.

Founder Jack Ma unveiled an aggressive invest-

ment strategy by investing

$680m into the payments

platform PayTM and

in Snapdeal, India’s second-

largest ecommerce site.

Alibaba’s model of first back-

ing local start-ups rather

than launching its own ser-

vices is one that others have

since followed, notably Chi-

nese internet group Tencent, which led a $90m

funding round for healthcare technology group

Practo last August.

Beijing-based search engine Baidu, said last month

that it was examining investments in three Indian

start-ups including restaurant portal Zomato. Chi-

nese smartphone makers such as Xiaomi have also

said they plan to pick up stakes in local companies,

as they target growth in India’s fast-growing mo-

bile market.

Although, things have cooled

down a bit since. Falling valua-

tions have made investors cau-

tious. Even Alibaba showed a

cold feet in it’s now failed talks

with Micromax for a 20% deal

in the Indian cellphone giant.

While Chinese funds look as a

fancy opportunity for Indian

startups, those struggling to raise money from oth-

er sources are also likely to prove least attractive

to Chinese investors as well.

Robin Li, Jack Ma and Pony Ma

‘China-India Mobile Phone & Component Manufacturing Summit’ brings together

Indian and Chinese handset manufacturers

By Kunal Daga

China becomes a big player in Indian start-up scene

By Kunal Daga



The Government of India released

the budget for the fiscal year 2016-

2017 on 29 February, 2016. Key

budget announcements included

increasing the inter-country foreign

direct investment limits and reducing paperwork to

increase transparency, in line with the Modi admin-

istration’s “Ease of doing business in India” initia-

tive.

Foreign direct investment (FDI) limit in the insur-

ance industry has been increased to 49.0%. At the

same time, foreign companies can now invest up to

100% of the share capital of listed Indian real estate

companies. This increase in the FDI limit in the real

estate industry shows the firm commitment of the

Indian government in speeding up infrastructure

development in the country. In fact, the spending

on infrastructure during the year 2016 will be raised

by $11.3 billion to boost growth. Foreign investors

can now buy the shares of Indian listed companies

to the extent of 15%. This has been increased from

the original limit of 5% of the listed share capital of

the Indian company.

The firm commitment of the Indian government to

attract foreign capital investment, especially in

greenfield projects is a tremendous opportunity for

countries like China which despite having a bulk of

global businesses and manufacturing capacities, are

crippling in the face of rising labor and land costs.

Indian markets provide a great opportunity for capi-

tal rich Chinese companies with surplus funds at

their disposal. The key challenge for these Chinese

players entering the Indian markets in the coming

years would be managing the regulatory hurdles,

cultural & language barriers and the pace of growth

and market transformation in India, something that

the Chinese have already mastered in their home

market. Testament to this view are the big Chinese

listed firms such as Alibaba, Fosun, Tencent, Sany,

Baidu, etc that have already invested in the Indian

market in the last few months.

It would be just a matter of a few months before

more and more Chinese companies would be look-

ing at furthering business ties ‘with and within’ India

by ‘making in India’.

The 2016 Indian Union Budget welcomes foreign investments with open arms;

Time for China to extend the hug

By Shantanu Pendse

Shantanu, an ISB MBA 2016 candidate and an exchange student at CEIBS, is a CA (AIR holder) and CFA degree holder has wide experience in the field of business valuations and a gestalt view of the business dynamics and the value drivers of businesses



A fact check of China and India would leave anyone to draw quite a few parallels almost

immediately. The middle of the last century saw both the countries economically strained

and distraught due to the constant conflicts, both internal and external. From lacking capi-

tal, relevant economic structure and trade policies to dismal infrastructure and technology

capabilities, the realities were bitter and many. An all-encompassing problem both these

countries faced was the sheer size of population. Any solution addressing an existing issue would only be-

come a real solution if and only if the effects of the same were capable of trickling down to the masses.

Unlike some of their Asian counterparts, India and China lacked many a favorable initial conditions that

would facilitate growth, owing to a far inferior human capital in terms of work skill and literacy rates. The

trajectories of growth of Tiger countries (Hong Kong, Korea, Singapore, and Taipei, China), which are way

smaller in size in terms of size and population, are self-explanatory as to how homogenous initial condi-

tions such as skilled human capital can be important determinants of faster growth. Japan, for instance

had to rebuild itself from scratch after the WW2, almost around the same time as India and China. It was

only a matter of three decades before Japan was restored to its former glory by effectively engaging its

highly skilled human capital.

Studies conducted to understand the reasons for the stagnating European economy has revealed that the

demographic situation to be one of the major reasons that is preventing these countries from overcoming

their debt crisis. Countries like Switzerland, the Netherlands, Austria, Hungary, Italy, Portugal, Poland,

South Korea, Russia are all expected to see declines of more than 10%, in population. In the case of Japan

and Germany, the decline is set to be an alarming 20%. Economists suggest these countries handle their

population issues at the earliest to prevent an economic downslide. Thus it becomes evident as to why na-

tions need a thriving population to ensure sustained economic growth.

A major issue highly populated countries face is the need for extensive investments in education and erad-

ication of poverty. With the onset of knowledge based solutions and technological advancements, modest

investments can ensure these basic problems are addressed quickly and effectively. When education em-

powers the masses, it creates a productive labor pool focused on innovation. The huge domestic market

will open up a window of opportunity for foreign direct investments which leads new job creation This in

turn generates higher spending power within the working class. These ripple effects can be expected to

stimulate the economy ensuring sustained growth.

Being host to one third of World's population – The bane of yesterday to be-

come a boon of tomorrow?

By Divya Joseph

#opinion



Greater density of population will necessitate innovation as there is a need for efficient use of available

resources. Most business model innovations are now happening in India and China as organizations view

these countries as test beds due to their unique demographics and needs. Thus a domestic market which

supports economies of scale and a highly effective work force can be identified as growth drivers of econo-

my in the coming decade. While many may point out that China has an ageing population, incapable of

directly contributing to the economy, the increased spending power of silvering population opens up new

markets in preventive/chronic health care and eldercare. China relaxing the one child policy is indicative of

the government's realization of the need to have strong human capital.

Even though the prospects for both countries look good, the recent turbulence in stock markets have raised

allegations questioning the soundness of their economic foundations. But I would like to think of these

'unfortunate' events are necessary corrections that any transitioning economy shall experience when the

policy makers try to bring forth reforms to ensure transparency, by moving away from breakneck policies to

an innovation oriented, healthy economy. In short, it may be a good bet to expect China and India to shoul-

der the world economy, going forward. Once a successful transition is made from being a manufacturing/

services based economy to a knowledge based economy, the stage is set for these countries to become the

dream destination for people who seek opportunities for growth. I anticipate a time not too long from now

when the terms "China Dream" and "India Shining" will be perceived with the same sentiment as the

"American Dream".

Divya, a CEIBS MBA 2016 candidate, hails from Kerla, India and is a seasoned consultant with 7+ years experience in Strategy, Marketing, and Entrepreneurship within Information Technology (ERP Solutions), F&B, and Retail industries. Reach out to Divya at [email protected]



I am from Singa-

pore and have

lived in Shanghai

for more than 4

years. I run an E-

Learning company in Singapore

that employs an Indian who has

been from his home in India for

me for the past eight years. All

these years, I have also out-

sourced many ad-hoc assignments

to Indians through online

platforms such as Freelancer.com.

Despite having worked with Indi-

ans for past several years, August

2016 was the first time I set foot

on Indian soil, and, the first time I

met my employee of 8 years. I ar-

rived at Bangalore to attend a

summer camp “Creative Disrup-

tions” organized by the Indian In-

stitute of Management, Bangalore

(IIMB). Through the programme, I

visited several Indian start-ups,

attended speeches from many In-

dian entrepreneurs, venture capi-

talists and mentors.

I had the opportunity to do the

same in Shanghai through my MBA

programme with CEIBS. Through-

out the four years stay in Shang-

hai, I have first-hand experience of

the entrepreneurial spirit, as well

as how advance China is in terms

of basic e-commerce infrastruc-

ture, such as mobile payment and

last-mile fulfilment.

Below, I share with you my per-

ceptions on various aspects of en-

trepreneurship. These perceptions

are formed through my personal

observations and information I ob-

tained from the Internet or shared

to me during my interactions with

my own network.

People

Both China and India are emerging

markets with large population. In-

dia’s population, currently at 1.31

billion is set to surpass China’s,

which is currently at 1.38 billion.

The economy, smartphone pene-

tration and internet penetration

are growing rapidly in both coun-

tries. China is set to overtake US as

the world’s biggest economy, and

India is also poised to overtake US

with a decade or two.

It is also notable that India has a

young population as compared to

other economies, not just China.

Half of India’s population is below

the age of 25 while more than two

-thirds are below the age of 35. It

is projected that in 2020, the aver-

age age of an Indian will be 29

years, compared to 37 for China.

Impact of international residents is

weaker in India than in China. Chi-

na hosts more than eight hundred

thousand expat workers while In-

dia hosts a meagre forty thousand.

I would attribute this gap largely to

the ‘perceived’ quality of living in

the two countries – lack of women

safety, poor infrastructure, unclear

taxation policies, etc.

Government

China is run by an authoritarian

government while India is a de-

mocracy. Policies can be imple-

mented and enforced much more

easily in China than in India, albeit

at the price of honest governance

(checks and balances). Besides,

although both country’s provinces

follow a top-down model in some

policies and provincial autonomy

in some, Indian states (provinces)

enjoy freedom in a wider range of

policies which means that laws in

India are not as homogeneous

across the country as they appear

in China.

Both China and India suffer from

ambiguity in written laws and poli-

cies. Often, businesses would not

know for certain what is lawful

and what is not. Government de-

partments at municipal levels exist

to help clarify policies. In China, it

is easier to seek assistance from

government officials in compari-

son to India. Petty corruption

(defined as small rewards given to

low-level officers) is rifer in India

as compared to China.

In recent years, both governments

have begun to recognise the im-

Entrepreneurship in China vs India By Kevin Lee



portance entrepreneurship and

making ‘doing business’ easy and

have been looking seriously into

clearing up bureaucracy for start-

ups with China focusing on easier

funding and India focusing on

cutting down bureaucratic pro-

cessing to bare-minimum. This has

also led to more emphasis on en-

trepreneurship in schools. Most

advanced degree programmes in

China and India now include some

courses in entrepreneurship.

Language

China is a diverse country like In-

dia, although the population in the

former is made up predominantly

of people of Han ethnicity, there

are many dialects spoken in differ-

ent geographical areas. The Chi-

nese government pushed the

adoption of “Putonghua”, also

known as “Mandarin”, as the offi-

cial language. As a result, one lan-

guage is sufficient to serve most if

not all of the population.

India has many dialects and lan-

guages – a total of 1,651; 150

widely spoken and 22 officially rec-

ognised. Although most urban ed-

ucated white-colour workforce

would understand English, the

market is made up largely of non-

English speaking rural population

with lower literacy level. As a re-

sult, it is more difficult to pene-

trate the ‘different markets within

India’.

Infrastructure

China has invested tremendously

in infrastructure, such as high-

speed rail and internet connec-

tion. The relatively low labour cost

also made it possible to ship goods

around the country fast and

cheap. For example, it is possible

to ship a 2kg parcel from Chengdu

to Shanghai, which is almost

2000km away, at less than USD 4,

deliverable within 3 days.

As for time-sensitive last-mile de-

livery, China has access to millions

of indigenous electric bikes to

drive efficiency and cost. There are

dedicated lanes for non-motorised

vehicles in all major cities, so the

delivery riders rarely face traffic

jams.

The same cannot be said for India,

or at least the city I was in - Banga-

lore. Traffic congestion is a major

problem to efficiency, and the lack

of high-speed rails also means low

efficiency in shipping goods

around the country. Delivery rid-

ers in India generally rely on high

cost petrol-driven motorcycles,

and are vulnerable to chronic

traffic jams.

Funding

Due to the lure of the huge mar-

ket, venture capitalists are paying

attention to both China and India.

As such, promising start-ups have

little trouble in attracting funding

in both the markets. In fact, China

and India have become the hotbed

for venture capital deals.

Types of Entrepreneurship

In China, I observed that most

start-ups are technology firms

offering services to the mass mar-

ket, especially in the online-to-

offline (O2O), mainly through mo-

bile apps. Most of the time, the

target audience is the growing

middle class and start-ups are tap-

ping on their growing spending

power.

Whereas in India, there is a strong-

er focus on social entrepreneur-

ship. The large income gap means

there are a lot of people who are

left behind. Many people in lesser-

developed parts of India do not

even have reliable access to pota-

ble water, electricity, or a func-

tional toilet. Many start-ups in In-

dia set out to improve such social

problems, rather than to be ex-

tremely profitable.

Payment

China has had online payment sys-

tems since as long as 2004,

starting with Alipay. In the recent

years, Wechat Pay has aggressive-

ly expanded market share through

mobile payments. In China, it is

now common to make mobile pay-

ments even at convenience stores

or restaurants. Merchants em-

brace the payment processing ser-

vices due to low transactional

cost, which is made possible by

the domestic bank card processing

network – UnionPay. It is possible

to get by in Shanghai with just a



Kevin, a CEIBS MBA 2016 candidate, hails from Singapore and is a serial entrepreneur. In past decade, Kevin has started 14 com-panies, 4 of which have reaped profits. Most notably an E-Learning website for driving theory testers. He is currently a co-founder & COO at a food delivery service in Singapore that is creating it’s own niece against competitors such as Foodpanda and Deliv-eroo. Reach out to Kevin at [email protected]

mobile phone and no wallet!

India’s consumer businesses rely

predominantly on cash, even for

most online-to-offline (O2O) pur-

chases. From my experience with

food delivery through a massive

start-up, Zomato, in India, ac-

ceptance of online payment was

almost non-existent. India only

launched its domestic bank card

processing network RuPay in 2012.

It will take time for merchants and

consumers to adapt to the new

products and services that are

built on top of this processing net-

work.

Unique Competencies

China is the world’s factory. It is

very strong in manufacturing, and

is also very good in copying prod-

ucts. It used to have low labor

cost, but this advantage is dimin-

ishing, giving way to countries like

India and Vietnam.

India has proved its strength at

frugal innovation, improvising on

existing products to make them

even more affordable, targeting at

the bottom of the pyramid. It has

also been a success in business

process outsourcing (BPO), due to

its relatively cheap English-

speaking workforce. The low la-

bour cost is also the key to help

attract manufacturing away from

China and into India. Companies

such as Xiaomi and Foxconn have

already put their money behind

this idea and are setting up plants

in India.

Afterthought

The key to a successful start-up is

to first have a product that your

customers need or want. That

means having to understand your

customers, or be able to pre-empt

what they need or want. One of

the reasons I went to China was

the possibility of me launching a

start-up in China one day – the

allure of huge market. I went to

Bangalore with the same thought.

I had also gone to the United

States and Israel for the same.

After thinking through my journey

for the past few years, I concluded

that it is, well not easy to simply

launch a start-up as an outsider in

any country. It would be difficult, if

not impossible, to understand the

actual needs of your consumers

and the complexity of the business

environment. If you are expanding

a business to India or China, the

best strategy is to establish a joint-

venture with a local individual/

company with deep understanding

of the market.

These exposures to different envi-

ronments in India, China, US and

Israel have been valuable to me

personally as they have bought

diversity to my experience.

sino indo business digest q1-2016

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