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Author | Dani, Editor | Jiang Xinyu, Long Fengmu, Reviewer | Jiang Yi
Introduction
Companies going overseas need to break through "three walls", and India is a "trap city" - Dani mentioned the many characteristics of the Indian market in this article. As a senior expert in overseas expansion, Dani pointed out that cases such as "making money in India and not taking it back home" are numerous.
The Trump administration imposed an additional 25% tariff on Indian goods starting August 27 to punish India for its large-scale import of oil from Russia, raising the total tax rate to 50%. When US Treasury Secretary Becerra was asked why similar measures were not taken against China, he said it's because China does not engage in "arbitrage" like India. He criticized India for significantly increasing imports of Russian oil after the outbreak of the Ukraine conflict, processing it and reselling it to the global market to make profits. This response has once again sparked heated discussions on Chinese internet about India's "foreign capital black hole" phenomenon and the "shrewdness" of Indian businessmen.
Then, what is the Indian market like in the eyes of Chinese enterprises? How should Chinese enterprises survive and develop in the complex business environment of the Indian market?
For this, Observers Net reconnected with Dani, the author of the "Overseas Journey" business series and former head of major client groups at Huawei in the Middle East, North Africa, Latin America, and Southeast Asia, to interpret "the Indian market from the perspective of Chinese enterprises." The South Asian Research Communication reprints this article for the reference of all readers.
Sujeet (left) and Blinken during a panel discussion at the Munich Security Conference, New Delhi Television report image source: Observers Net
➤ Observers Net: In the eyes of many Chinese entrepreneurs going overseas, the Indian market is both a "next China" with 1.4 billion people, and a "hell" with changing policies and complex business environment. What do you think is the general perception of Chinese enterprises regarding the Indian market?
➤ Dani: I think the perception of Chinese enterprises towards the Indian market has gone through three stages.
The first stage was roughly from 2000 to 2010. At that time, most Chinese enterprises entering India believed that India was a very vast market, but some infrastructure was still relatively backward. Many people came to "prospect for gold," because India itself also had infrastructure construction needs, so the order volume looked very large. Due to the large population, the order volume was indeed considerable, but the other party often wanted to bargain hard. However, due to the huge market potential, many companies still rushed into India. The earliest ones included Huawei, as well as some communication and ICT companies, such as FiberHome, ZTE, and Datang, which also entered the Indian market at that time.
But after entering, they gradually realized several problems: first, the unit price was very low, second, the performance was not ideal - the other party initially talked about a big order, but eventually the discount was very large.
In addition, the Indian government sometimes takes certain measures, such as initiating anti-dumping actions. For example, around 2004 to 2007, many communication equipment companies were subjected to anti-dumping or countervailing duty sanctions by India. Of course, India also uses departments such as the immigration bureau to conduct surprise inspections on labor compliance, accusing companies of irregular employment practices. Moreover, India has canceled signed orders on the grounds of domestic anti-terrorism laws or national security.
Once a company becomes large, it may face various sanctions from the Indian government - the first batch of Chinese enterprises entering India began to truly realize the complexity of the Indian market at this time.
To summarize, the first layer of problems in the Indian market is low prices and poor final performance - this is the situation most companies will encounter; the second layer is when companies gradually grow larger, they may face many obstacles and pressures in finance, taxation, legal affairs, and human resources, such as visa issues for personnel, labor compliance issues, etc.; the last layer is for individual companies: the government intervenes under the pretext of national security or counter-terrorism, terminating previously signed agreements.
In fact, few countries use this method globally, but India has used it against Chinese enterprises, and it happened even before 2010. For example, in 2008, there was a terrorist attack in Mumbai - a movie called "The Taj Mahal Hotel" was filmed based on this event - although it was an incident unrelated to China, at that time, India canceled part of the orders of some Chinese enterprises for this reason.
The 2008 Mumbai serial terrorist attacks occurred on November 26, 2008, in Mumbai, India's financial center, causing at least 166 deaths and 308 injuries (not including the attackers). Image source: China Economic Net
Although the first batch of Chinese enterprises entering India have realized that the Indian market is vast but very difficult to manage - however, this awareness did not spread widely at that time.
The second stage was from 2010 to 2020, during which more types of enterprises entered India.
The first category was Internet companies. For example, UC Browser chose India as its first destination, because people thought that to enter the Internet, one must first target a large population country, and many Chinese enterprises like this approach.
The second category was Chinese infrastructure companies. Around 2010, there were already a large number of Chinese infrastructure companies entering India, undertaking large EPC projects, including building bridges, roads, power plants, and energy facilities. If you check relevant reports, you will find that at that time, a batch of state-owned enterprises and central enterprises encountered significant setbacks in the Indian market, including banks and infrastructure companies. A very typical case is Shanghai Electric Group. In 2008, Shanghai Electric Group signed a 1.3 billion USD contract for power plant equipment with Reliance UK, a subsidiary of Reliance Group in the UK. However, later the Indian side refused to pay most of the remaining contract amount on the grounds of technical defects, leading to a major commercial dispute where Shanghai Electric faced huge accounts receivable that could not be recovered, and three Chinese banks providing project buyer credit could not recover their loans.
Image source: Observers Net
The third category was mobile phone manufacturers represented by Xiaomi, OPPO, and Vivo. These companies choosing the Indian market is also reasonable, because making phones requires a large population base, and Chinese smartphones have high cost-effectiveness, especially suitable for large population countries. In fact, during the era of feature phones, Chinese white-label counterfeit phones once made a profit in India. But when brand enterprises officially entered, the Indian side initially gave various promises, such as land, intellectual property protection, tax incentives, and other resource support. However, in the following years, the situation took a sharp turn: vivo quickly withdrew, OPPO faced asset freezes, and Xiaomi was repeatedly frozen for transfer pricing issues. Huawei once set up an independent regional department for India, but later merged it into the Southeast Asia regional department due to the market not meeting expectations. These are the situations in the second stage.
The third stage is from 2020 to 2025. Most of the companies that entered during this period are "Apple chain" factories and their downstream industries that followed Apple.
Certainly, in these five years, the public saw more negative news related to India. Due to "going overseas" becoming a hot topic, previously less openly discussed negative experiences of investing in India were gradually uncovered by the media, attracting widespread attention. In addition, the border conflict between China and India caused more exposure of India in the media, appearing more complex and negative. People began to realize that India is a complex market and an unfriendly market, and some even described India as "schizophrenic," with the term "foreign capital graveyard" being widely mentioned.
Image source: Observers Net
On June 29, 2020, according to an announcement by the Ministry of Electronics and Information Technology of India, the Indian government decided to ban 59 apps from China for reasons of sovereignty, territorial security, defense, national security, and public order.
Why are there so few Chinese enterprises now doing mobile internet in India? I think there are two reasons:
First, users have no willingness to pay, even though the Indian market has a large user base, it is difficult to achieve commercial monetization and conversion.
Second, India, using the Sino-Indian border conflict, banned about 200 to 300 Chinese apps, and all Chinese apps that had developed in India were basically removed during that period.
Thus, mobile internet companies also formed their own understanding during this process: initially, they went there because of the large population; in the second stage, they found it difficult to achieve commercial monetization in the Indian market; in the third stage, they realized that it was a high-risk market, "it can be banned at any time" - this can be said to be the common problem that internet companies faced in this period regarding India.
➤ Observers Net: Then, in the current latest stage, that is, the one you mentioned from 2020 to 2025, with further deepened understanding of the complexity of the Indian market, do Chinese enterprises still have a contradictory mentality? After all, India has a population dividend of 1.4 billion, but at the same time the business environment is so complex.
➤ Dani: I think this contradictory mentality still exists. As the saying goes, "You don't hit the wall until you have to." Many enterprises first consider survival issues, and India, as a large population country, once offers a large order, it is really hard for most enterprises to resist. I mentioned earlier that the experience of early ICT enterprises in India did not effectively pass on to later mobile phone manufacturers, internet companies, or even state-owned enterprises; and the difficulties these enterprises encountered around 2020 were also lacking in sufficient information sharing among each other.
Because these early pieces of information were not widely spread in the media, many enterprises are still unaware of the real situation in India. Those who have not personally "hit the wall" are still easily attracted by the scale of the population. I often encounter this reaction when communicating externally: when it comes to going overseas, many people's first reaction is "if we are going to do it, we should go to a large population country" (this kind of cognition still exists currently). Although a large population country has attraction, it does not directly equal market opportunities.
Certainly, some enterprises that have suffered losses have become more cautious. For example, some foreign trade enterprises or equipment manufacturers, due to their dealings with Indian customers, have accumulated experience, and they adopt more stable strategies in payment methods and cooperation models. If they can screen customers, they might even actively avoid Indian orders.
But the reality is that there are still many enterprises that continue to plan to enter India. Especially some enterprises that are new to going overseas, if the person in charge lacks sufficient understanding of India, they may still be persuaded by the large orders. It's like how many enterprises today view the U.S. market - knowing there are various risks, but seeing the huge opportunities, they still want to "try hard."
➤ Observers Net: India is actually a country that relies heavily on foreign investment, but it often adopts a strategy of pressuring foreign enterprises. In your opinion, does this reflect that the Indian government lacks a long-term rational choice?
➤ Dani: I understand this issue in this way. I think there is a general concept in India. I'll give an example.
At the Munich Security Conference in 2024, Indian Foreign Minister Subrahmanyam Jaishankar was asked by the moderator, "India has always been importing crude oil from Russia, how does India balance its increasingly close relationship with the United States and continued trade with Russia?" To this, he asked the moderator, "What is this question? Why is this a question?" He also said, "If I am smart enough and have multiple choices, you should admire me, not criticize me."
The statement by the Indian Foreign Minister reflects that from the top of the Indian nation, to the middle class, and even to ordinary people and the lower class, there is a thinking logic or concept that permeates everything.
First, there is a strong class nature internally (those in power to those below). I'll give two examples of my own observations: Once at an international airport, an Indian foreman managed the labor force in a very brutal way. But that was an international airport, a public place, and people passing by were shocked... Another time, I met an Indian client overseas. Because of his position, he didn't show any disrespect to me, but according to my observation, his attitude towards my Syrian local employees was quite "harsh."
Second, it seeks all favorable conditions for itself, even if the methods are not very honest or glorious. The most typical example is the various "pressures" on foreign enterprises in India. For India, they not only want cheaper products, but also constantly require foreign enterprises to transfer technology and industry. That is to say, they not only lower prices, but also gradually require you to hand over technology, let go of executive positions (CXO), and force the use of local supply chains. At a certain stage, they may even require companies in India to sell their assets at a low price to a few major Indian conglomerates - this is why so many foreign enterprises have been driven out of the Indian market.
➤ Observers Net: Facing this situation in India, what measures can Chinese enterprises take? Or, what kind of response strategy should be formulated for such a market like India?
➤ Dani: For larger enterprises, if they have a choice, they should try to avoid large-scale investments in the Indian market. If the enterprise is just conducting general trade, the risk is relatively controllable. But if the plan is to build a factory, set up a point, and carry out localized operations, such investments should be minimized as much as possible. If you are planning to transfer a large amount of supply chain resources there, entering through greenfield investment, especially if you are already a large brand enterprise, then after growing large in India, the survival environment will actually be very difficult.
Therefore, it is best to avoid complex greenfield investments in India. Once the investment is made, the demands from the other party will be very strict, and the enterprise may also face pressure to transfer the supply chain. India is now "exchanging market for technology," attracting foreign investment to promote localized production. With a sufficient reserve of Indian engineers and support from local conglomerates, they will gradually force foreign enterprises to shift their supply chains under compliance requirements. Once the transfer is completed, it actually helps India achieve domestic substitution.
In this process, not only is the supply chain transferred, but technology is also gradually required to be handed over. Once caught in this situation, many things will go beyond the control of the enterprise, like entering a pre-set trap. So, the best way is to avoid going there - especially for large enterprises that have already achieved scale, they should avoid deep investment as much as possible.
Objectively speaking, the current business environment in India is not suitable for large international companies to stay and operate for a long time, with high risks. Of course, if the enterprise has no other market options, it can only face reality; but as long as there are options, it should try not to get involved easily.
Finally, I would like to add one more point: the advantage of manufacturing costs in India cannot be ignored, and India also values education, has a large number of excellent science and engineering talents, and has a dense industrial structure. Although the "India solution" in the "China +1" strategy is quite difficult, looking at the global manufacturing division pattern, there are few countries that can create a China replacement effect. Therefore, Chinese enterprises also need to pay attention to this change.
➤ Observers Net: There is a saying that in India, enterprises may have to go through three "pressures" before they truly wake up - the first two may still have illusions, thinking that they need to adapt to the local market characteristics, pay some "tuition fees" or pay certain costs. So, for enterprises, when should they decisively consider exiting the Indian market? Are there any warning signals or specific recommendations?
➤ Dani: First, when the Indian tax authorities start to audit and you find it impossible to communicate effectively, you should be vigilant. Second, if the overall business environment clearly deteriorates, for example, the other party starts to exert pressure under the name of "national security," this is also a signal. Generally speaking, when it comes to tax audits, it often means that the business environment has deteriorated - because it's not a regular tax inspection, but because you have been "targeted."
Once the business environment deteriorates, the other party will continuously tighten the conditions, such as requiring technology transfer, localization of the supply chain, and even some companies recently being unable to actually conduct business. All these signs indicate that they are actually trying to push you out. Once you realize that you have been targeted in India and the business environment continues to deteriorate, the other party begins to gradually erode your rights, you must jump out as soon as possible, don't wait until it's too late to react.
For this, I recommend that if enterprises have staff stationed in India, it is best to have a supervisor from the headquarters who is permanently stationed locally, because the people on the front line can see the real situation more clearly than the headquarters. The reason for having a supervisor's identity is that the general manager on the front line may still fall into the "unwilling to give up local opportunities" dilemma spiral due to their own interests.
Image source: Observers Net
➤ Observers Net: Finally, for Chinese enterprises going overseas, especially those choosing to go to India, what advice can you give them?
➤ Dani: I think the key for Chinese enterprises going overseas right now is not to blindly go where there is a market, but to have a clear main path. Enterprises need to clarify "where I can do it," rather than just being attracted by "where there are more people, where there are more orders," and must form their own core strategy.
This is like the core strategy of the Chinese Communist Party after the failure of the Great Revolution, which was "surrounding the cities from the countryside," instead of sticking to big cities; or like the advice given by Zhuge Liang in the "Longzhong Plan" to the Liu Bei group - first take Jingzhou, then take Yizhou, and then plan for northern campaigns.
For Chinese enterprises, going overseas should not be "reacting to each situation," but should have a choice in the overall strategic direction. Once the strategy is clear, don't be too concerned about small fluctuations. When choosing a path, it is necessary to consider from easy to difficult, not to challenge high-risk markets like India right from the beginning. If it is necessary to enter, it must be done with great caution, using simple and controllable methods, avoiding complex and high-risk operations.
If you decide to invest a large amount in India right from the start, you will gradually face the situation of forced supply chain transfer and gradual technology transfer, which is very dangerous - not only for the enterprise itself, but also for the entire industry.
Chinese enterprises should clarify the main thread of their overseas expansion. Small fluctuations can be ignored, but the main line must not deviate. Your core development path must be clear. For most enterprises, it is advisable to follow the principle of starting from easy to difficult and gradually expanding, choosing markets that they can participate in and have confidence in, rather than blindly betting on India - there is no market that must be entered. It is better to consider entering India after accumulating sufficient advantages and resources elsewhere.
About the Author: Dani, former head of overseas business at Huawei, author of the "Overseas Journey" business series
This article is reprinted from the "Observers Net" app on September 9, 2025, titled "Dani | I Say Something from the Heart: 'As long as there are choices, don't get involved in the Indian market easily' "
Editor: Jiang Xinyu, Long Fengmu
Reviewer: Jiang Yi
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