Riding the dragon

Then: In January 1999, when Venugopal Dhoot of consumer durables major Videocon International went on a reconnaissance trip to Shanghai, he was floored by what was on offer: The provincial government was willing to lend 100 per cent of the cost of Videocon's proposed Internet TV plant-cum R&D centre; the land was being offered at a concessional rate; turnaround time for ships at the Shanghai port was much shorter, compared to 16 hours in India; power cost a bare four cents a unit, a third of India's; highly-skilled design engineers were available for as little as Rs 5 lakh a year, a tenth of what they cost in India; moreover, Videocon could also tap the booming Chinese market by paying a valueadded tax of just seven per cent.

Losing no time, Dhoot set up Videocon International in February 2001 to produce Internet TVs. Last year, it churned out 80,000 Internet TVs. This year it will produce a quarter more. Says Dhoot, Managing Director of Videocon International: "The China proposition is simply irresistible." India Inc. could not agree more. Since the late '90s, when Indian companies took serious note of the Middle Kingdom, fear of China has gradually been replaced by a sense of opportunity. Now that the expected decimation of Indian manufacturing by aggressive, low-cost Chinese manufacturers has not happened, Indian companies have suddenly realised that it makes a lot of sense to set up manufacturing units in China to take advantage of the country's low costs and superior infrastructure.

Now: Contrary to what was expected, Indian companies have not made a beeline for China, as the cost of doing business in China has increased significantly during the past decade, thanks to its economic boom.