Chinese woes for Traders

The recent case of Indian traders being kidnapped in China has opened up a can of worms. Apart from the case revealing weaknesses in the Chinese judiciary, it has also brought out in the open something that traders from India were facing for a long time.

The big trade that happens between India and China is through the scores of wholesalers operating out of wholesale markets in India. These are not the big guys who prefer getting into litigation that easily. The question is why? Consider the case of Manish Rewari. He has been doing business in exactly the same town of China for years now. And he swears by the advantages that China gives him in his business as he shows off a fascinating watch that he had picked up in China for one tenth of its original price! But Manish's experience has soured. He used to work with a Chinese agent previously.

During one of his recent trips, Manish had struck a small deal and purchased goods for Rs 75,000 through the said agent. The agent took the money, delivered him the goods, but never paid the original seller. The next time, when Manish came and tried to directly deal with the seller, the moment he provided his old receipt with the previous agent's name to show the price at which he had bought the goods in the previous trip, the seller pounced upon him. His grudge was that he had not received the money for that particular transaction. Manish very courageously tried to defend himself by saying, truthfully, that he had obviously paid up for the same. This he did despite knowing "that they could pick him up and make him disappear".

Sensing trouble, Manish approached the nearby police, who in their very usual manner told him in Chinese that they were there to protect only the interests of the Chinese. That's when good sense prevailed. Manish knew that he had come for just three days and had a lot of deals to strike.

Manish agreed to strike a deal with the seller, and paid fifty per cent of the pending money again. This year, however, Manish is not ready to go to China anymore; well, almost. He now works through an Indian agent. The recession hasn't been great for businesses and he fears that even the Indian agent might not have paid up properly to the Chinese sellers. The fear is that the Chinese sellers might again pounce on him. "The question of safety for the foreign trading community is totally missing despite us being such regulars and buying so much from them," he said.

Of course, the Indians and the system are also to blame. The Indian traders often place an order. But our customs department people at the docks often increase the demand for bribes irrationally. When the traders don't pay up - in order to teach them a lesson and to ensure that the next time, they meet their demands easily -- our customs department doesn't release the traders' consignments. So the Indians don't pay the agents the remaining dues and the agent in turn often fails to pay his Chinese counterpart. The problem however is that it's the Indian trader who starts suffering. Between the Indian and the Chinese authorities, some kind of rules need to be outlined to make the lives of these businessmen easy.

-- The writer is a management Guru and Honarary Director IIPM Think Tank

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