13 March 2019

Impact of cheap Chinese products on the Indian economy


Go to any goods market in India or visit any online retail site, you will find cheap Chinese products everywhere – whether it's electronic gadgets, crackers, decoration items, or other daily consumables, you will find a cheaper Chinese version for almost everything.

Although, these cheap products that usually come at the price of 10-70 percent lower than their original counterparts, help consumers save their hard-earned money; however, they are impelling a negative impact on the Indian economy.

Chinese products are affecting not just the domestic businesses and industrial market, but also the export market of India as many people are replacing Indian goods with Chinese ones. The ‘Made in China’ label has become the most preferred choice in India and other countries due to price factor and availability of huge variety.


Talking about how they are affecting the economy largely is one of the major concerns worldwide. Few points to support the concerns are:

1. Chinese crackers contain Sulphur which is more dangerous that Nitrate and during Diwali, they create a lot of pollution in the country. However, due to their low price, a majority of buyers get attracted to these products and the revenue of the India's domestic cracker industry has to bear the brunt.

2. Apart from crackers, Chinese toys are also impacting the Indian toy industry. According to the ASSOCHAM, the Indian market is full of Chinese toys, so the Indian toy industry is struggling hard to survive. Nearly 40 percent of Indian toy companies have been closed in the last five years, and rest 20 percent are struggling to break even. In fact, the Chinese toy market is the largest in the world. Cheap Chinese products have become the reason for the shutdown of nearly 60 percent of the industrial units in Bhiwandi and Thane.

3. Chinese firms focus on the mass production and consumption strategy, which is the main reason why their products are low cost. On top of that, the Government of China has export-friendly policies, they buy raw material from around the world and sell the end products back to the world.

4. Due to cheap prices, wide availability and huge profit dissemination to the dealers, China has become the second-largest export-focussed country in the world. The unsafe Chinese electronic goods are of inferior quality and do not come with any guarantee or service. These products are not even long-lasting. There are many manufacturers in India that import cheap Chinese goods and then sell them under their own label. China Wireless Technologies has also tied up with India's Reliance Communications to sell their dual-SIM smartphones in the country.

Before it gets too late to act, India must consider taking actions to reduce the import of these cheap and inferior quality Chinese goods to save its MSME units and economy. The government should encourage country's small businesses to reduce the foreign goods and should also bring some serious changes in the policies, infrastructure, technology, and duties to protect the domestic manufacturers from these Chinese goods.

If you as a customer prefer buying cheaper Chinese goods over the Indian ones, it's high time to consider purchasing the Make in India products only.

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