You might hear of the Zoomlions, Huawei’s, Tata’s and Reliance’s of the world browsing businesses and plumping profits between China and India, but an increasing trend and a strong flow of human and financial capital crossing between China and India are also smaller, lesser known companies in either market, that anonymous to those outside their core markets are creatively and seamlessly cementing links amongst out two nations. Forging into new market, treading new tie-ups and bravely going where few large companies have been, smaller firms from both China and India are exploring each others markets.

Take for example, China’s Yapp, an automotive company based in the town of Yangzhou, not too far from the Eastern megapolis Shanghai, which has inked a 49:51 JV with India’s Zoom Enterprises and operates facilities in Chennai and Pune. Manufacturing plastic fuel tanks, the JV supplies to major car makers including Volkswagen India, Ford India and Mahindra. According to Sun Yan, President of YAPP: “We expect India to be the biggest overseas market for us.  As India is fast becoming a big producer and consumer of automobiles, second only to China, we are nevertheless positive on our growth potential in this country”.

Similarly, Indian Technocraft Industries has set up a factory in Nanjing, on China’s Eastern seaboard for scaffolding systems, steel boards and clamps. The owner of the little known equipments company told CNN, “In China, the benefit primarily was the raw material cost, … The overall cost of production in China is much lower. Even now, the cost differential between here and China is around 10 to 15 percent. And then you have the labor cost difference. Once you add in all the productivity etc. the labor cost in China is definitely lower.” The company which has manufacturing facilities in Thane, a district outside Mumbai, added “In India you have a lot of hidden costs,” Saraf explained. “In China they welcome foreign investment, they welcome industries to be set up there. So setting up was relatively easy and quite fast so you also save on the time. The faster you start up the faster is your recovery on investment.”

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While the trade deficit between India and China yawns wider to US$29 billion in December, as Indian exports drop in both volume and value, analysts are predicting both nations to grow at 7-8 percent GDP by 2015. With India expected to rise from her 5 percent GDP growth rate, China is expected to consolidate growth.

According to the World Bank’s recently released issue of Global Economic Prospects 2013, China’s growth rate would be 7.9 percent and that of India 7 percent. According to the bank, at factor cost (excluding government interventions such as indirect taxes and subsidies) India will grow from 5.1 percent in 2012 to 6.4 percent in 2013-14, 7.1 percent in 2014-15 and 7.3 percent in 2015-16. In contrast, from a near 9 percent growth in 2012, China is expected to grow 8.4 percent, 8 percent, and 7.9 percent in the successive three years. On a more global scale, the World Bank forecasts that global gross domestic product (GDP) will inch up 2.4 percent this year, from 2.3 percent in 2012. In its last forecast in June, the bank projected global growth would reach 3 percent in 2013.

“China is growing at a phenomenal rate right from 1978 or 1980 and you can’t grow at 10 percent for more than a couple of decades. ”China has done it for 30 years and this has been expected in China and expected by us that China will continue to grow very rapidly but it will probably come down from these great highs,” World Bank Chief Economist, Kaushik Basu told a news conference.

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Its like the recipe for sweet and sour neighbours has gone wonderfully sweet. The sudden addition of defence dialogues, high level security advisors meeting on the sidelines of the BRICS summit and a warm friendly letter between heads of state. The concoction that’s simmering on optimism, has rested with positive media reports and blog posts of ardour from both sides of the Himalayas is now ready to be served and enjoyed by a two billion or almost one-third of the world’s population.

In a recent continuation of the Hu Jinato line, following in his footsteps without rocking the boat too much, successor Xi Jinping reiterated that the world is big enough for both China and India. China’s newly elected President who visited India earlier when he was a Provincial leader, said that China will “pay great importance to developing relations with India”. The quote mentioned in a letter to India’s Prime Minister Dr. Manmohan Singh, was delivered by soon to retire State Councillor and top diplomat Dai Bingguo. It also mentioned that China-India relations “have maintained stable development in the past few years, which has brought about substantial benefits to the two countries and the two peoples,” according to a report released by the official Xinhua news agency on Saturday. Xi continued in the letter that “the world has enough space for China and India to achieve common development, and the world also needs common development.” China, he added, “will, as it has been doing, pay great importance to developing relations with India and expects to carry out close cooperation with India to create a brighter future of their bilateral relations.” Dr. Manmohan Singh and President Xi Jinping are expected to be meeting for the first time at the BRICS summit to be held in South Africa in March.

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When it comes to the healthcare sector, both China and India are learning from each other and upping their skills dramatically to be able to offer their citizens the best in medicine. A major challenge for any developing economy, especially one with the size of India and China, healthcare reforms in infrastructure, services, quality of ingredients and distribution is vital.

While China is learning softer healthcare services skills from India, the South Asian nation is regulating and checking quality on Active Pharmaceutical Ingredients (API’s) imported from China. According to the figures with the Department of Pharmaceuticals in New Delhi, India in 2009-10 imported 60 percent or US$ 1143 million of her API’s from China.  In 2010-11, API’s imported into India from China rose 64 percent of the total imports to  US$1881 million.

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India might be the undisputed software developer of the world, yet China is fast adopting technology for improved long term performance. The Middle Kingdom’s software industry revenues rose 25.8 percent touching US$4311 billion or 1.96 trillion yuan in the first ten months of the year according to a report by China Software Testing Center (CSTC).

Going electronic, China is aiming to computerize her healthcare, education and other goods and services, for better efficiency going forward. While many of her systems are already computerized with a 75 percent satisfaction rate, India lags far behind in getting her population on the grid. According to a report by United Nations Conference on Trade and Development (UNCTAD), the domestic use of software in India is only 23 percent of total productions compared to almost 90 percent in China. Moreover, Chinese production is almost three times to that of India.

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Flushed with funds and the will to explore investments in newer markets is aiding Chinese investors  to consume vineyards in France, farms in New Zealand and alternative energy companies in the US. The gradual economic colonization of the East has begun, and while China isn’t expected to meddle in a country’s internal affairs, western consumers are afraid a small segment of their culture is being eroded.

According to the Rhodium Group, a New York research firm, China’s overseas investment totaled US$67.6 billion last year, one sixth of America’s US$400 billion, and could reach US$2 trillion by 2020 . This doesn’t include the investments made through subsidiaries of Chinese companies in Hong Kong and Singapore, which contribute to a significantly higher amount of total Chinese investments internationally.

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Very soon, Indians will be driving Chinese cars manufactured in India on roads financed and constructed by Chinese firms.

China’s largest sport utility vehicle (SUV) and pickup manufacturer Great Wall Motors Company Ltd. is contemplating entering the Indian auto market. According to the Wall Street Journal, the privately owned enterprise is looking at locations for a factory in three states Gujarat, Tamil Nadu and Maharashtra and is close to finalising a destination soon. After breaking ground on its factory early next year, GWM plans to roll out its first SUV in India by end 2015. GWM officials were recently in India to meet members of the Society of Indian Automobile Manufacturers to iron out details.

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