End of the road for Chinese manufacturers

Great Wall Motors and a few other Chinese brands were keen to establish a base but a backlash due to border skirmishes and a closer scrutiny of Chinese investments has led to things coming to a standstill. Brian de Souza reports on the broader ramifications.

Two and half years after US carmaker GM struck a deal with Great Wall Motors (GWM) of China to sell the Talegaon plant, the Chinese company has apparently thrown in the towel, and asked the handful of employees it hired to leave. This effectively means the Chinese company has called off its India plans.

GWM clearly had ambitious plans for India and had displayed a whole range of products including pickups and SUVS at the 2020 Auto Expo. However, within months Covid struck. Two other Chinese players, FAWand Changan Auto were also targeting India and had displayed their offerings at the Auto Expo.

In June, GWM went ahead and signed an MoU with the Maharashtra government in the presence of the state's then CM, Uddhav Thackeray along with Subhash Desai, the industries minister. It was around this time that a series of intrusions at the Ladakh-China border areas in which a few Indian soldiers were killed, led to a country-wide animosity and backlash towards the Chinese, and this further deepened with a call for a boycott of Chinese goods.

As the world's Covid crisis deepened with the spread of the virus, the Indian government modified its FDI policy to call for greater scrutiny of all prospective investments from China. To set a context, it may be recalled that in the US, there were security concerns around Huawei, China's 5G telecom giant, which fuelled US-China trade tensions. The fact that China was seen as responsible for the spread of the virus didn't not help either.

Globally, the pandemic highlighted the fact that dependence on one geography for a single product was now a clear and present risk and the need was to set up alternative sources for parts, products, etc to keep the wheels of business humming.