[ZenMaster]

Originally Posted by Sebring

Meanwhile China is marching into India having picked up 1.75 lakh shares in HDFC. Did they create Covid 19 for world domination?, remains to be seen.

Exactly the thought I had (the world domination part) when I heard the news. Whether its a virus "created" by china or not, China is doing everything to make sure that they come out on top. The chinese billionaires and their govt. Backed companies are flush with cash. With the oncoming massive recession and falling share prices, which is an avalanche that has already started , this is a "great time" for them to lap up shares for cheap. If they choose too invest, which I think they will, will give them a chance to decide which companies live or die.

By backing up companies that they want and which they think will be profitable and huge in the future, its definitely a way to dominate the world indirectly. They can even force these companies to move their manufacturing to china if it already hasn't. They see themselves as the new masters of the world who will have control of the banks and industries in many countries.

Africa is already under their control. Indias neighbours are increasingly seduced by their riches and I expect some european countries to bow down to the Chinese, owing to the lackluster support they saw from the EU.

Who ever sowed the seeds, its definitely the chinese whose going to reap the harvest unless other countries can relaunch themselves as new manufacturing and investment hubs.

[Sebring]

Imagine, all this started with China being 'cheap'. Turned out to be 'prohibitively expensive' for the whole world.

Originally Posted by ZenMaster

Exactly the thought I had (the world domination part) when I heard the news. Whether its a virus "created" by china or not, China is doing everything to make sure that they come out on top.

[aashishnb]

Originally Posted by Dieseltuned

When we say HDFC, if I read it right, this is the mortgage company and not the Bank. We have just opened a senior citizen's account in HDFC bank and plan to move some of our savings there, will it be ok to trust an organization no less a bank after this move by Chinese investors? I know my thoughts could be preposterous but what does this forum think?

I think you should not worry even if they bought shares of HDFC Bank.

The Chinese bank (government controlled) bought the shares on the Stock Exchange. Anyone can do that. Till they have a significant stake to affect the voting or have board representation (which again is governed by the maximum amount any one entity can buy, shareholding norms, etc.) they will have no impact on the day to day management of the company.

If they start buying shares in all the PSU oil refiners & RIL shares, you will not stop buying petrol / diesel. Same logic applies.

You may be right to be concerned if they start getting into management. Even then, banks are highly regulated by RBI and your deposits will be reasonably safe - even Yes Bank was not allowed to implode in the interest of deposit holders, a lot of banks / financial institutions were made to compulsorily invest in the equity of Yes Bank.

[Samurai]

Whatever great monopoly China held, they are losing it for a simply reason. Risk!

Now, no one wants to put all their eggs into one basket.

Risk mitigation has started, as companies have started diversifying their suppliers base. China will remain the leader for now, but they will not be the only shop in town anyone.

[tsk1979]

Originally Posted by Samurai

Whatever great monopoly China held, they are losing it for a simply reason. Risk!

Now, no one wants to put all their eggs into one basket.

Risk mitigation has started, as companies have started diversifying their suppliers base. China will remain the leader for now, but they will not be the only shop in town anyone.

And I am worried if India does not seriously cut down on the red tape, the gainers will be other east Asian countries.
WE have very good schemes on paper, but in reality, implementation falls flat. Look at our pharma policy and the drone policy. The rules came out on paper, but they are so weird that getting things actually done is a nightmare.
Same thing with telecom. There is no regulatory stability. Every new govt makes new rules, and from a thriving multi operator scene a few years ago, we are hitting a duopoly with state owned option going under.
This is a very good time to see a similar jump in GDP / Capita what Vietnam etc., saw... but I am not very optimistic. Sure, India will get some pie, but it may be just scraps.

[Samurai]

Originally Posted by tsk1979

but I am not very optimistic. Sure, India will get some pie, but it may be just scraps.

Yes, I agree. India will not get much from the China's loss. Our government bureaucracy will ensure that. They treat export businesses like crooks and try to keep them under very tight leash.

[SmartCat]

Originally Posted by tsk1979

And I am worried if India does not seriously cut down on the red tape, the gainers will be other east Asian countries.
This is a very good time to see a similar jump in GDP / Capita what Vietnam etc.,

Mexico and Vietnam gaining might have something to do with "common" culture too. American companies might be more comfortable with setting up a parts factory in Mexico rather than India. Chinese parts supplier might be more comfortable with setting up another factory in an East Asian country like Vietnam or Indonesia than India.

[tsk1979]

Originally Posted by SmartCat

Mexico and Vietnam gaining might have something to do with "common" culture too. American companies might be more comfortable with setting up a parts factory in Mexico rather than India. Chinese parts supplier might be more comfortable with setting up another factory in an East Asian country like Vietnam or Indonesia than India.

Yes, low cost of shipping means Mexico will benefit. However, there is nothing cultural. If that was the case Africa would not be the next battleground. Business follows the cheapest and easiest path. Remove the red tape (Not from newspaper article or govt website, but in real life (IRL) ) and business will come.

[m8002?]

Originally Posted by tsk1979

If that was the case Africa would not be the next battleground. Business follows the cheapest and easiest path.

My understanding is that the battle for Africa is for its natural resources and to a smaller extent for the untapped market. I dont think many MNCs would be very interested in setting up large industries ( manufacturing or services ) there. And have to admit, the Chinese had been early investors in Africa and have bought over the support of many African countries.

[r_nema]

This has been an ongoing trend for sometime now, Japan is just another country in the long line of developed nations which is now urging its companies to move out of China.

Samsung has recently started manufacturing all its devices in India, Apple has slowly started doing the same when they started assembling some of its older generation devices in India. They might start doing this for their whole product line as well.

As far as Chinese monopoly in cheap labor goes, I think that it will still be some time when it goes away, specially after this covid-19 pandemic. It is one of the first nations to start its manufacturing plants again since all this started, giving them a nice head start. This will actually harm our own economy even more as the markets will be flooded with cheap chinese manufactured goods once this ends.

But then again, this is the opinion of just one person.

[headbanger]

So this covid 19 disturbed me as well and one of the vows was to get away from "Made in China" stuff. Let's not get into why I decided to move away from China made products and simply put it as consumer discretion. I went out in the market to purchase list of medications needed for the family and one equipment that was needed was a respiratory nebulizer. With social distancing norms and long queues, I backed my instinct and picked Dr. Morepen brand nebulizer due to limited availability and paucity of time. Came back home and realised that this is "Made in PRC". Vow breached.

I shared this anecdote to share a broader theme that while there may be a political or social will to go against China, but the ground realities don't back up that will in the current situation. There has to be graded response even if any nation wants to disengage China and that means a sustained political will to do so for a long time after the pandemic ends.

[ValarMorghulis]

While this is understandable from Japan's point of view, China is light years ahead of other nations when it comes to manufacturing. They are no longer just "cheap manufacturers". They are de-facto makers of the entire world for they have specialized and perfected ultra precision manufacturing over time.

Today they manufacture some of the most expensive and super specialized stuff because it is possible only in China. Cost, as an advantage, is no longer the sole reason for their manufacturing (even Tim Cook accepted this).

That said, world's over dependence on them gave everyone something to introspect. This is an opportunity for India and hope they help OEMs setup shop here and not lose out due to bureaucratic hurdles (like past years).