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Whisper campaign over Chinese goods spooks corporate India

Reeba Zachariah

Call it Chinese whisper or whatever, but spooky they are. Rumours of an influx of Chinese consumer products at drop-dead prices have begun to create havoc in India Inc.

As a result, industry feels that consumers are deferring purchase decisions putting local manufacturers in a fix. Primarily, as prices being bandied about come to only around half the production cost of most Indian companies.

The rumour mills are working overtime. Consider this: Chinese 14-inch colour televisions for as low as Rs 1,200, cycles for Rs 300, motorbikes for below Rs 30,000, MP3 players for Rs 5,000 and walkmans at Rs 180 apiece.

But reality is turning out to be quite different.

A trip to almost any importer, or any gray market outlet, shows that such cheap Chinese imports are still a fantasy.

"Everyday, there is a mad rush for cheap Chinese durable products, but they end up buying an alternative product at a more realistic price. But it is a fantastic marketing campaign for Chinese labels," says a gray market dealer.

Rajeev Karwal, senior vice-president (consumer electronics) at Philips India and president of Cetma, says, "The rumors are definitely affecting sales as consumers are putting off purchase decisions. The industry will react strongly to it by publicising that it is all a big hoax."

Karwal explained that it was impossible for distributors to sell CTVs at such low prices, taking into account that a colour picture tube alone costs an equivalent of Rs 2,000 in any global market.

RL Ravichandran, senior vice-president, marketing at Bajaj Auto, said: "Consumers are waiting to see if they can get a 2-wheeler for Rs 10,000. But given the current import duty structure and the taxes, a new bike from China will cost around Rs 35,000 and a second hand one could cost around Rs 10,000... and it will still have to follow emission norms."

He, however, feels that consumers before buying would certainly look at the availability of spare parts, resale value etc.

Raj Kataria, senior vice-president at DSP Merrill Lynch concurs. "Consumers who are used to buying quality products will not switch to low-priced products," he says. But it still appears be a wait-and watch policy for Indian consumers as the craze for the "Made in China" label continues.

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