India imports more products from China to fight inflation

Indian importers are looking to Chinese manufacturers more and more to fight rising costs, according to dual surveys released by trade publisher and trade show organiser Global Sources.

The surveys, conducted in July and August, tracked the views of thousands of volume importers and purchasing managers who supply to India's retail distribution channels. The surveys focused on consumer electronics and hardware and building materials - two of India's fastest growing segments.

"As India's economy continues to expand, Indian consumers have more disposable income to spend on luxury goods like consumer electronics," said Bill Janeri, general manager at Global Sources.

"Indian consumers want the next hot electronic gadget or a new large-screen LCD television. And retail distribution channels in India are better able to supply this demand than ever before, with a wide selection of quality, affordable products," he further added.

Last year, China became India's largest trading partner - overtaking the US. While the Indo-US aggregate international trade is expanding by 23-24 per cent annually, India-China trade grew at 50 per cent during 2002-2006 and increased by 54 per cent during 2007 to reach $37 billion.

According to the survey respondents, a high percentage of India's buyers have extensive experience in importing. And many already import from China; 46 percent of hardware buyers already import from China, while 54 percent of electronics importers already buy direct from Chinese suppliers.

Of those buyers who are not already importing from China, between 44 per cent and 49 per cent plan to in the next 12 months.

Reason? Rising inflation, say India's purchasing professionals. Over 75 per cent of both surveys respondents said their companies were struggling with rising costs and are looking for lower-cost sourcing options.

"To combat inflation, India's purchasing managers are sourcing products more frequently. They are stocking less inventory in their warehouses and on their retail shelves," said Janeri. Over 96 per cent of survey respondents said they are souring more frequently than in previous years.

Supply-chain management is becoming more efficient in India. And these buyers are looking to Chinese manufacturers to supply this ever-changing need for products. Around 90 per cent of survey respondents said they felt Chinese suppliers offered end-consumers a wider selection of products at reasonable prices. Over 95 percent of respondents to both surveys indicated they would increase their purchases of products from China in the coming year.

—Shailesh Shah