Unwanted in Trump's America, Indian IT finds a suitor in bitter rival China

It’s a little weird to think of India and China as buddies.

There has been at least a half-century of rank hostility between the two most populous nations in the world, ostensibly kicking off when India gave the Dalai Lama refuge, post the Chinese invasion of Tibet.

A short but debilitating border war in 1962; claimed occupation of territories by both sides; China’s alliance with Pakistan and its efforts to influence other countries in India’s backyard — they all ensure that these two fast-developing nations will never cosy up to each other.

And yet, the irony is that there has never been a better time for increased economic cooperation between the two. What is interesting is that this is something the two nations are increasingly doing despite the confrontational rhetoric that seems to perennially dominate the state of affairs between them.

This development is not because of some sense of bonhomie that has magically developed overnight, but for some very practical reasons. India is witnessing a vaporization of the outsourcing model at light speed, and is increasingly getting shut out of the US via some stringent new bills on the table that want to do away with armies of Indians on H-1Bs.

On ground, a hostile environment against immigrants recently culminated in an Indian engineer being shot dead in Kansas, making Indians think twice about coming to the US for work. So, quite naturally the country is increasingly desperate to not just move further up the IT value chain but also diversify its client base.

China, for its part, has recognized that the manufacturing boom has reached its ultimate end, and with labour costs sky-rocketing, is ceding ground steadily to India. So much so that pretty much every Chinese phonemaker worth its salt has opened up factories in India including Vivo and Oppo in Greater Noida next door to Delhi, Gionee in Visakhapatnam, Huawei in Tamil Nadu, and Xiaomi in Andhra Pradesh. Out of the 37 mobile manufacturers who made investments in manufacturing in India in the last year or so, more than six were Chinese.

Therefore, the next great leap forward for China seems to be an effort to become a center for technological innovation. As the Hindustan Times reports, Communist Party mouthpiece Global Times penned a recent article titled “China should hire Indian science, high-tech talent to maintain innovation ability”, suggesting that China has not been working hard enough to attract science and technology talent from India to work in the country.

“China cannot afford to risk a decline in its attractiveness for high-tech investors. The nation is among the third echelon in cutting-edge technology fields and is working to catch up with the US and the result of its efforts will decide whether China will maintain its status as an emerging global economic power,” the newspaper said.

“China has made the mistake of ignoring Indian talent, and instead has attached a greater importance to talent coming from the US and Europe.” (Hilariously, the publication also issued a stern warning to India a few days ago to not meddle in the country’s relationship-building measures with Nepal and Sri Lanka on the eve of a trip by its defense minister.)

The Chinese market may be small for India, but it is growing rapidly, which is good news for Indian IT players hoping to diversify their revenue base. Recently, Indian industry body National Association of Software and Services Companies (Nasscom) co-hosted an event with the Nanjing government to foster more ties between Chinese companies and Indian tech outfits. It was popular enough to attract over 50 Chinese companies from a wide array of sectors including smart manufacturing, aviation, environmental protection, and health.

Almost all the Indian IT majors from Infosys to Wipro to TCS and HCL were in attendance. Infosys says it has already started working with Chinese companies, thereby creating references for itself for future business which is, China hands say, de rigueur in order to grow and prosper in China. Chinese dairy firm Yily is a recent Infosys customer, which it won in a competitive bid.

Gagan Sabharwal, director of global trade development at Nasscom, told The Economic Times that Indian IT has already set down roots in the country with 25,000 employees across all firms. Most importantly, most of those employees are Chinese, not Indian — a model it has started to adopt in the US. “We are not trying to serve China outside of China. We are serving China from China,” he said.

As far as Indian talent is concerned, especially those who are now wary of opportunities in the US post Donald Trump coming to power, there are some definitive attractions, says China’s Global Times. For one, Southwest China’s Guizhou province easily outdoes Bangalore in terms of lifestyle and salaries. And for the Chinese, an Indian engineer still costs only half of a Chinese one, making him a bargain.

Of course, language and food will continue to be large hurdles for Indian engineers, but that hasn’t stopped 24 agreements worth $22 billion inked between Indiana and Chinese companies during Prime Minister Narendra Modi’s visit to the country last year.

The most enduring sign of a concrete bond between the two countries, forged amidst the reliable throes of consumerism rather than any kind of political thaw, was visible in India last year during the all-important Indian festival of Diwali. Then, a strident, countrywide movement was ignited on social media to boycott Chinese goods following China’s stance on a UN ban against Masood Azhar, leader of terror outfit Jaish-e-Mohammed.

The result: Sales figures for Chinese products on the top three Indian online retailers in the first week of October hit a new record high, terrorism be damned. China’s Xiaomi, current heart-throb of a phone company for Indians, sold half a million phones in just three days.

Apparently, John Lennon was wrong. Or at least not entirely right. All you need isn’t just love. In this case, apparently all you need is love of a smartphone.

Now India will hope that this kind of ardour is replicated across the border as well.