Great Wall's investment in India, even if there is no border conflict between China and India, still has directional issues in strategic choices. On July 1, General Motors reluctantly stated that the plan to transfer the Talegaon plant in India to Great Wall Motors "no longer exi

Great Wall’s investment in India, even if there is no border conflict between China and India, there are still directional issues in strategic choices. It is actually not feasible for Chinese companies to strategically invest in India.

Author | Qice

Editor | Tiancao

| Autobot Media

On July 1, General Motors reluctantly stated that the plan to transfer the Indian Talegaon plant to Great Wall Motors "no longer exists", General Motors Will seek next buyer.

George Svigos, GM's executive director in charge of public relations, explained the reason: "We were unable to obtain the required approvals within the transaction deadline."

Svigos also said: "GM (left) "The India strategy has not changed, and GM hopes to receive offers that reflect the value of its factories." He hinted that there are still potential buyers besides the Chinese, but the offers are too low.

Brazil benefits from India’s new investment regulations

In fact, as early as July 2020, both Great Wall and General Motors knew that this deal was no longer going to work. The two extensions of the agreement were nothing more than routine within the framework. Even so, the deadline for trading expired on June 30 this year.

In contrast to the early loss of confidence of its counterparties, Gothik Ganguly, a local executive hired by Great Wall in India, did not leave his job until March. This Indian, whose position has not yet been determined, is Great Wall India's No. 1 employee and is responsible for planning Great Wall's India plans. However, his three and a half years of hard work is destined to be in vain.

Great Wall has already shifted investment to Brazil in the summer of 2020. Great Wall plans to invest up to US$1 billion in India, and now plans to invest up to US$1.86 billion in Brazil. The former funds are actually included in the latter. The first model for the Brazilian market will be launched in Brazil in the second half of this year through large-scale vehicle sales.

At the end of January this year, Great Wall took over the Iracemapolis factory in Sao Paulo, Brazil. After digital transformation, it will be put into production in the second half of 2023, with an annual production capacity of 100,000 vehicles. Not only will it comprehensively deploy the localized supply chain and radiate to Latin America, it will also focus on electrification and intelligence, which is equivalent to replicating the small-scale Great Wall China business.

Compared with India’s original plan, Brazil’s plan is also much more ambitious.

General Motors, Ford, Nissan , Honda and other car companies have used long-term investment activities in India to verify the actual performance of the Indian market, which is far from outside expectations.

In 2019, Great Wall negotiated with General Motors. General Motors privately revealed to Great Wall that India’s foreign investment policy “will become very friendly.” Of course, such policy expectations cannot be written into the agreement.

In January 2020, Great Wall signed an agreement with General Motors, setting a one-year delivery period and stipulating that it can be extended up to two times, each time for half a year. If "the agreement is not established" due to policy factors, the two parties will not constitute a breach of contract.

In April 2020, India did announce new regulations for direct foreign investment, that is, an automatic approval process without government intervention. In June of the same year, Great Wall and General Motors jointly applied for foreign direct investment approval.

However, India immediately added a new rule, that is, "investment intentions from land neighbors are not applicable to automatic approval." In fact, it is to invest in for China. This clause blocks 150 investment proposals, including deals for Great Wall and General Motors, even though these agreements were signed before the conflict between China and India intensified.

India's Industry Minister specifically stated that investments by Beiqi Foton, Great Wall and Hengli Engineering (a manufacturer of hydraulic equipment ) will be "suspended", citing the Ministry of Foreign Affairs' recommendation to "not sign any further cooperation with Chinese enterprises" protocol".

Before Trump came to power, political issues between countries usually did not have a direct impact on specific companies investing in . Even if there was a willingness to intervene, they hoped to act within the existing rules rather than adding temporary rules. But the United States was the first to break the boundaries, and India just followed suit.

The result of freezing all agreements was that Great Wall switched to Brazil. Originally it was not an either/or choice, but as a result of the abolition of the Indian plan, Brazil received an investment package that was twice as large as expected.

Fundamental risks of investing in India

Some people believe that India’s approach is to shelve it rather than reject it, and to delay the acquisition agreement to allow it to terminate naturally. In the future, as Sino-Indian relations become warmer, there is still a possibility that relevant investments will be unfrozen.

In fact, General Motors has become very impatient with spending millions of dollars every year to maintain two Indian factories. The two factories have long since ceased operations, and the prospect of finding new buyers has become very slim. There are currently no serious offers from local Indian companies.

If these two General Motors factories, worth US$250 million, cannot be sold in a few years, they are destined to become dilapidated garbage dumps where equipment and property are stolen due to the continued intrusion of local residents.

Great Wall’s investment in India, even if there is no border conflict between China and India, there are still directional issues in strategic choices.

Great Wall has always wanted to deploy in South Asia, but India does not support the “One Belt, One Road” initiative. This does not mean that it is against mainland integration in terms of national strategy, but it does not want integration by China.

In the long term, India seeks to prevent China from exerting too much influence around India and compete with China in Southeast Asia, which is related to India's long-term interests. India's foreign and economic policies have shown this time and again.

This means that Chinese enterprises’ investment in India must be shallow, asset-light and established under the multilateral trading system. Avoiding long-term, major strategic investments is the key to stopping losses in time if you are treated unfairly. No matter what the relationship between China and India is, whoever despises this point will suffer a big loss.

The result of the deviation of purpose and means

Contrary to the Chinese people’s perception, the Indian government under the leadership of the People’s Party is not as naive as the Congress Party in its foreign relations, but is a complete realist. After waking up from the self-expectations of the leaders of the Non-Aligned Movement, India became a swinging power in the international system.

The so-called "swing" is just a euphemism. A closer expression is " opportunistic ". That is, whichever big country offers more sweetness, rush over and take a bite. As for the requirements of the major powers (the United States and Russia) for India to play the role of "regional balancer", after India has enjoyed the benefits, it either plays dumb and fails to fulfill it, or fulfills it perfunctorily.

India has always sought to play a key role in the reform of the international system, claiming that the United States has recognized the potential of the US-India alliance. However, in fact, India has never realized the potential of the "US-India alliance" because it is not concerned about its own obligations.

In all these multilateral and bilateral mechanisms such as QUAD, BRIC , on , RCEP, India claims to avoid marginalization, but in fact it is marginalization.

India is playing soy sauce in these organizations and has been wandering in front of the organizers, wanting to pick up a few dates, but does not want to take responsibility. If you refuse to participate in the game after your request for special treatment is rejected, you are actually admitting in disguise that you have problems with your competitiveness and that you cannot win if you participate.

India has been struggling with whether the West really supports India's rise. But the West is not yet worried about this, because the prerequisite for choosing to support it or not does not yet exist. India's rise has been in the future tense since 2005 and has never materialized.

It is completely unreliable that India hopes to become a major member of the so-called "political West". As long as it refuses to alienate its traditional ally Russia, the United States will not treat it as an ally.

India’s stated goal of “embracing opening up and seeking influence in the global landscape” is contrary to its actual behavior.

Investment policies are constantly changing, and local market policies are suddenly corrupted. I will not go into details here. Speaking externally, India seeks a favorable position within the regional integration system rather than simply participating in the regional integration process.To translate, the prerequisite for India’s participation in multilateral economic organizations is that it will receive adequate special care.

The amazing thing is that India refuses to pay the economic price for any political deal or make political compromises for economic interests. This means that India cannot fulfill its claimed economic potential and cannot integrate into the regional multilateral economic framework.

The result of having both politics and economy is to catch neither.

India’s choice has not changed

When Modi came to power in 2014, an analysis agency claimed that the total volume of the Indian automobile market in 2020 will be around 11 million vehicles, which is close to half of China’s. Multinational car companies agree with this.

But by 2017-2019, American and German companies were clamoring to withdraw. Except for and Suzuki , all Japanese companies are also hesitating.

Why did all the foreign car companies suddenly leave in the past few years after they had survived in the past few decades? You know, there was no epidemic at that time, and there was no terrible situation of "double shutdown" of the domestic market and production.

The reason is very simple, that is, Modi’s “New Economic Policy” has been deemed bankrupt. In 2019, Indian car sales fell by 13%; it will be even worse in 2020, with less than 3 million vehicles sold throughout the year. Carlos Ghosn, who is known for his outspokenness, said when he was still in office: "The Indian market is very special, and foreign-funded enterprises must give up any attempts to gain short-term profits."

Due to the impact of the Russia-Ukraine war, India is "from We will quietly retreat from the position of "revolting whenever China encounters China". On June 29, India's largest cement manufacturer Chaoke Group bought 172 million yuan of coal from Russia's Siberian Coal Energy Company, paying attention to it in yuan. This incident caused an uproar on Indian social media, and Chaoke was scolded.

In fact, India has a long-term deficit with China and lacks RMB positions. However, because Russia was kicked out of SWIFT and required payment methods other than the US dollar, and the ruble and the rupee were both unstable (the Indian rupee continued to hit new lows), among the non-US dollar systems, the RMB exchange rate was the most stable, so the payment could only be made in RMB.

What Chaoke didn't tell the Indians was that they not only exchanged and used RMB, but also used the CIPS system of the China Central Bank.

The Meng-Ai high-speed railway (Mumbai to Ahmedabad), which was originally planned to be opened to traffic in 2022, has not yet completed land acquisition, leaving Japan in a dilemma over the US$12 billion contract. General Motors' plan to sell factories has been shelved, and it will also be ruined in its own hands. There are shadows of Chinese companies actively participating in this, but India's choice has never changed.

"Speaking out of integrity", no matter how much India hates China because of geopolitics, in the end it may still have to sit on the fence between the American system and the rising "non-American system".

India is very clear about what are hard needs and what are soft needs. Buying coal and oil is a hard demand, and you can only hold your nose when you lower your head. Accepting automobile investment, building high-speed rail, etc. is a soft demand, which requires the complete elimination of Chinese capital and technology. This has little to do with border conflict , but comes from its own strategic positioning and choices.

It’s actually not feasible for Chinese companies to strategically invest in India. [Copyright Statement] This article is an original manuscript by Autobot Media and may not be reproduced without authorization.