By Qiaofu

Focusing on People, Cars, and the World

Witnessing the Ascent of China's Automotive Industry Together

Chery has stirred up a buzz by announcing its foray into the Indian market. If Afghanistan is known as the graveyard of empires, then India could well be considered the graveyard of multinational corporations. Chery's bold move to dive into the Ganges waters, while showcasing its market ambition, prompts us to offer our best wishes to the company.

However, best wishes alone cannot ensure Chery's success in India. Numerous renowned enterprises have encountered setbacks in India, and Chery should not assume that its own capabilities and charm will easily win India's favor and sincerity.

Chery is not the first company to seek opportunities in India. Whether it can carve out a niche for itself, Chery would do well to consult its predecessors first.

01 Foreign Enterprises Falling Prey to India's "Pig-Butchering Scam"

Many companies have been ensnared by India, with its penchant for setting tailor-made traps being a notable characteristic. India treats all foreign enterprises equally, regardless of their nationality, making it difficult for any to emerge unscathed.

In 2007, after Vodafone from the UK acquired Hutchison Whampoa's Indian assets, it was slapped with a $2.2 billion tax bill. The government then retroactively amended the law, raising the fine to $5.1 billion, far exceeding Vodafone's total profits in India.

In 2014, Nokia's factory in Chennai was frozen by the Indian government due to a tax dispute. In 2015, after Baobian Electric from China exported ultra-high voltage technology, it faced a sudden policy change regarding "localization rate." Despite an investment exceeding 1.2 billion yuan, the company was ultimately forced to sell its assets cheaply at 137 million yuan to an Indian partner.

In 2017, after 20 years of operation in India, General Motors incurred losses exceeding $1 billion. When it attempted to shut down and leave, it was entangled for four years due to stringent labor laws, union protests, and government obstructions before finally managing to exit.

In 2022, Xiaomi had 55.51 billion rupees (approximately 4.8 billion yuan) of its funds frozen on charges of "illegal remittance."

Moreover, SAIC MG India, after gradually gaining a foothold, sold its controllers to an Indian company.

To lure companies into these traps, India cooperates closely across all fronts, from legislation and customs to enforcement agencies. For instance, to attract Tesla to invest and set up a factory in India, Modi specifically targeted Tesla with a significant reduction in electric vehicle import tariffs and amendments to the Foreign Exchange Management Act.

However, in the end, Musk did not take the bait. According to a May 17 report by the Press Trust of India (PTI), India's Minister of Heavy Industries and Public Enterprises, H.D. Kumaraswamy, confirmed to the public that Tesla had officially abandoned its plan to build a factory in India, regretfully giving up on the preferential policies specifically tailored for it by the Indian government in the electric vehicle sector.

India could not wait for Musk and instead encountered Chery. But with so many big names having faltered, does Yin Tongyue, Chery's chairman, believe he possesses greater charm and foresight?!

02 Will Chery Be "Exploited"?

Chery's cooperation with the Indian side this time is primarily through a light-asset technology platform licensing approach. Specifically, it provides Indian partners with a complete electric vehicle manufacturing platform and related core technologies, charging technology licensing fees and per-vehicle patent fees.

From a modal perspective, Chery does not need to make substantial investments in physical assets, falling under the category of technology export. However, technology is also an asset. By exporting its technology platform as a whole to India, Chery is essentially teaching India how to build cars step by step. The crucial point is that the final car owners' logos will not be Chery's. Is Chery truly so desperate for those technology licensing fees?

What spirit drives a Chinese automaker to travel thousands of miles to India, exporting knock-down kits and teaching India assembly and technology hand in hand?

Tang Sanzang journeyed to Tianzhu (India) to seek Buddhist scriptures, but what does Chery seek in India?

03 Don't Be Enamored with India; It's Just a Myth

Many people harbor serious misconceptions about India, assuming that with its large population base, optimal population structure, and rapid economic growth, India must possess a demographic dividend and significant consumer potential. However, a large population does not equate to a labor force, nor does it equate to consumer potential.

India claims a literacy rate as high as 80.9%, but its definition of literacy is merely the ability to "read, write, and understand" any language. India boasts nearly 20,000 "languages" and 1,369 mother tongues. Not everyone can be considered a potential labor force.

Therefore, whether India's vast population base can be converted into a demographic dividend is highly questionable.

Without becoming a "demographic dividend," Indians cannot become qualified consumers.

So, don't be enamored with India.