The Indian embassy in Beijing last week issued its second safety advisory this year, warning its traders not to do business in Yiwu, a market town in Zhejiang Province famous for its trade in small commodities, following a series of controversial business disputes related to Indian traders. China’s Ministry of Foreign Affairs, however, expressed concern that the action would not help solve these issues but could further damage bilateral trade.
Things haven’t been going well between Chinese sellers and Indian buyers in Yiwu in recent couple of years. According to media reports in 2009, a Yiwu dealer sent a shipment of goods worth 6 million yuan ($947, 400) to an Indian buyer, only to find out later that the buyer couldn’t afford the deal and was unwilling to return the goods.
Chinese consulate in Mumbai thus issued an advisory to Yiwu’s business community, warning them to be aware of some rogue companies.
However, a year later, several Yiwu business owners reportedly found themselves stuck in a similar case, after another Indian businessman repeatedly refused to pay for the goods he ordered due to lack of fund. After a number of failed negotiations to get the payment, the furious Chinese decided to solve the issue by force. They illegally detained the Indian and took back their goods. Thanks to the help of Chinese authorities, the Indian buyer eventually returned home safely after he handed over the payment to his kidnappers.
Unfortunately, even this awkward experience failed to prevent similar incidents from reoccurring. In December, two Indian businessmen were again accused of breaching contracts after they failed to pay over 10 million yuan for the goods they purchased.
After an Indian diplomat appeared on the scene, he was surrounded and questioned by angry locals.
In fact, this case was not the only reason for Yiwu traders’ uproar, as local business owners had just swallowed a huge loss of 165 million yuan caused by another Indian absconding without payment.
Based on these accounts, it seems obvious that the Indians brought these troubles on themselves. It is them, not the Yiwu business community, who should be held accountable for these disputes.
Yiwu’s success is strongly tied to national policies and the hard work of the locals. The Yiwu people value opportunities and are willing to take risks, such as sending goods in advance to help trusted clients or to open up new markets, yet this goodwill has been violated by some bad apples among the Indian business community. As someone born and bred in Yiwu, I know that most businesses in Yiwu are small and the loss of several million yuan is a death blow to them.
Those Indian merchants who deliberately don’t pay for their goods betray the trust of their Yiwu counterparts and damage the interests of the sellers. It is understandable that the sellers may adopt some radical actions to demand payment, given the potential damage to their business.
However, the Indian authorities has chosen to ignore the true nature of the disputes between Indian and Chinese traders in Yiwu and instead warned Indian businessperson not to come to Yiwu. This takes business disputes between individual civilians to the diplomatic level, which will only undermine ordinary trade between honest dealers from both countries.
The India embassy warned it was dangerous to do business in Yiwu, but they didn’t mention the danger is caused by Indian merchants themselves, which leaves the impression that the people in Yiwu are rude. This is actually a slander against Yiwu residents.
Such incidents damage the reputation of the Indian business community as a whole.
Pawan Kumar, president of the Federation of Trades Association of Delhi’s largest wholesale market, once told media in India that he found Yiwu’s markets comfortable and the locals friendly. Prakash Menon, president of IT firm NIIT’s China operations, also suggested that Indian traders should learn Chinese rules and procedures.
There are over 1,000 Indian merchants in Yiwu, and they are heavily dependent on the local market. Speaking for crooks and fraudsters will only trigger more prejudice against Indians here, and ultimately hurt the interests of honest Indian businessperson in Yiwu. The worst result is that Indian merchants may lose opportunities in one of the world’s most vigorous trade markets.