The United States and China are usually the two countries India’s e-commerce and technology sectors look to for ideas on what comes next. Should they also be looking at South-Korea, Japan, Norway and Philippines?
Each of those countries has suffered massive economic costs due to Chinese boycotts of their products.
After South-Korea deployed the US-developed THAAD anti-missile system in July 2016 to protect itself against possible North Korean nuclear attacks, China’s government and citizens started boycotting its brands. In just over a year, the sales of South-Korean car brands in China had halved; tourist inflows into China fell by 70%, and 80% of South-Korean Lotte’s supermarkets shut down.
Since 2012, the Chinese government and consumers have been intermittently boycotting Japanese brands over the two countries’ dispute over some islands in the East China sea. Japanese brands ranging from cosmetics to cars to hotels have suffered crippling sales drops. China even stopped exports of its rare earth metals to Japan.
It would take 6 years for Norwegian trade relations with China to get back to normalcy after China started boycotting its salmon and brands in 2010. This is after the Nobel Peace Prize was awarded to Chinese democracy advocate Liu Xiaobo.
Even small Philippines bore the brunt of a Chinese boycott when its bananas became the target of Chinese ire after its navy vessels confronted Chinese fishing vessels in the South China Sea.
“China uses its economic muscle to punish countries that refuse to toe its line,” said geopolitical analyst Brahma Chellaney in an article a few months ago, calling it a “weaponization of trade”.
Cut to India.
The cumulative FDI inflow from China has increased sharply in last three years, growing from $410 million in May 2014 to $1.63 billion in July 2017, according to the Department of Industrial Policy and Promotion. Data tracking company Tracxn says Chinese companies have invested about $2.37 billion in Indian companies since 2016.
India and China recently ended a tense nine-week long territorial standoff in Bhutan’s Doklam plateau. During the standoff, calls for boycott of Chinese products grew visibly from numerous small groups, including some aligned to the ruling political party. Baba Ramdev, the yoga guru and founder of multi-billion-dollar consumer goods brand Patanjali, has publicly disavowed Chinese smartphone brands in favour of Indian Micromax. The ministry of electronics and information technology and pharmaceuticals took decisions that made national security look paramount.
Should Indian brands with Chinese investments be worried? It’s a list that looks like the Who’s Who of e-commerce, including Flipkart, Paytm*, Hike, BigBasket, Byju’s and MakeMyTrip.
A border war between India and China is highly unlikely.
Despite having very different political systems, traditions of statecraft and unresolved border disputes, these are two large civilisation-states determined to use the current opportunity to achieve national developmental goals.