India shines like a tempting lure for Chinese companies seeking to expand abroad, and on first glance the Indian market looks like a natural fit. Who better than the Chinese, after all, to provide basic computers and air-conditioners at bargain prices?But Chinese firms have found profits in India are hard to come by. Tax barriers are everywhere, eroding their cost advantages. And Chinese goods have a low-quality image that is very hard to shake. The challenges are not unique to India. Most are exactly what Western companies encountered when they first arrived in China some 20 years ago. But Chinese companies, whose success so far has been largely built on their home-court advantage and low costs, are much less prepared to tackle those issues. Chinese companies, for example, lack technological know-how, marketing savvy and managers with international experience. Winning over Indian consumers is much harder than wooing the Americans or Europeans, who treat TVs and DVDs almost as disposable items. Indians want to make sure that their hard-earned savings go to products that will last. Branding and marketing are the key in India, but that just happens to be Chinese companies’ Achilles’ heel. “People here think the Chinese goods are cheap, but of poor quality,” said V Balakrishnan, chief financial officer of Infosys, India’s No 2 software exporter. “Some even say they send all the good ones to America.Chinese firms need to spend some time to change the perception.” Unlike Western companies with deep pockets who are more willing to invest for the long haul, many Chinese firms are under pressure to turn a profit quickly. For Chinese companies whose domestic market is becoming saturated, fast-growing India represents the biggest prize. India is also a test for Chinese firms with multinational ambitions: If they can’t make it in India, how can they expect to conquer the developed markets? The Indian market is not for the weak-hearted, and Chinese companies that invest a lot and invest early will be rewarded, just as Koreans were rewarded after going to India 10 years ago, and as Americans who went to China 20 years ago have finally arrived at their pay day. “I have felt very deeply how thorny the road is to become a multinational, but we have to do it,” Wang said. “India is a very tempting cake for us.”
