ISSN 2330-717X

India-China Relations: The Yiwu Incident – Analysis


By Bhaskar Roy

Small incidents sometimes reveal deep malice resting somewhere deep down in the body. The recent incident in which two Indian employees of a Yemeni company were abducted by owners and employees of a local company is not only related to India- China business relations, but how Chinese business entities deal with their foreign partners with support from local authorities.

Yiwu is a trading town in China’s eastern Zhejiang province. It is bustling business center where businessmen and traders from all over the world come. Business is a two-way street and sellers and buyers are interdependent partners. Therefore, Yiwu will continue to function and flourish.

China - India Relations
China - India Relations

In this particular case, a Yemeni businessman and owner of the defaulting company, vanished overnight, leaving a substantial debt which his Chinese partners. The two Indian who were illegally held by the Chinese company were employees, and not owners. To get out of this situation the two Indians offered to pay whatever they had in their personal savings. But that was not obviously enough. They were ill treated and beaten up. Even this could have been sorted out, but things took a bizarre turn in the hallowed precincts of a court room.

An Indian diplomat from the Shanghai Consulate, Balachandran, who under diplomatic rights guaranteed under the Geneva Conventions, went to Yiwu to hear the court proceedings, was held in the court house with the two Indians for over seven hours without access to food, water and even medicines with support of the local court officials and law enforcers.

Balachandran’s detention has two aspects. One is medical. Denial of medicine and food to a diabetes patient can result in death due to diabetes shock. This is well known. Balachandran fainted. Had he died it would have been a major incident.

The other is diplomatic. Diplomatic impunity enjoins the host country to allow the diplomat to perform his duties without hindrance. In fact, the host government is supposed to facilitate a diplomat to do his work and enjoy certain privileges including protection from arrest or confinement. Any violation of these codes by the host government means violation of a very important international agreement and can destroy the established diplomatic behavior.

If there is so security to the life and dignity of a diplomat, what can Indian traders expect. A combination of all these factors apparently led to the Indian Embassy to issue a travel advisory to Indian businessmen planning to visit Yiwu. The Indian Embassy’s move may be questioned by some as an over reaction. But the issue had grown to proportions in India especially on the treatment meted out to the diplomat that some visible steps had to be taken by the Ministry of External Affairs. Without these steps the two Indian businessmen would be still languishing in some jail in Yiwu, and Indian diplomat’s confinement would have been brushed under the carpet.

After recouping, the Chinese official and media propaganda arm has decided to hit back in the most unfortunate manner. Arrogance and acting with impunity appears to have become the hallmark of the Chinese authorities.

Chinese Foreign Ministry spokesman Hon Lei (Jan-05) suggested India to educate its businessmen in China to “practice honest and trustworthiness: and abide by Chinese laws and regulations. The State owned news agency The Xinhua (Jan 06) alleged that the Indian diplomat had tried to sneak out the two businessmen out of the court house on the pretext of going to the toilet. As with propaganda some flaws are always there. The Xinhua report did not think where the Indians would escape to when surrounded by China in Yiwu.

The Global Times, a subsidiary of the Chinese Communist Party mouthpiece the People’s Daily, not only questioned the business ethics of Indian businessmen involved, but took the attack to the Indian Foreign Ministry. It described the actions of MEA in this case as “full of narrow nationalism, which is not wiser that the editors of Indian media”.

Certainly, there are honest businessmen and dishonest businessmen in all countries. China had its own share of dishonest businessmen, a large number of whom are absconding abroad with a substantial amount of Chinese money. Adulteration of food stuff by Chinese companies, which are also exported are well known. Tainted milk, chemically treated lean meat, tainted suchi are just among a few. These manufacturers have their own supporters among the authorities. Chinese business unscrupulousness is of legendary proportions.

One significant example of Chinese official business collaboration to coerce a foreign partner has become a must reading for businessmen doing business in China. The Australian mining giant, Rio Tinto, had its top executive in China, standby Hu, jailed on corruption charges. Hu, an Australian citizen of Chinese origin was Rio Tinto Chief Executive in China. The company had prevented a Chinese conglomerate from a $18 billion partial takeover bid. There were other political and strategic issues.

The Indian and Australian examples are only examples. There are other Indian experiences in China, and many countries have suffered more. On the contrary Chinese companies and workers have got away lightly and with dignity when their shoddy work led to an accident killing 41 Indians.

China’s national slogan is China can do no wrong. Its national driving force is making money by whatever means. The mixture of the two make for heady concoction there reason and truth are the main casualties.

It must also be admitted that China’s Central government’s control over the provinces and countries are not strong enough. The business mafia-party officials-government officials – police/security have established such a strong nexus to usurp and cheat there own countrymen with impunity, that a serious backlash from their people is only a matter of time.

The world and India will continue to do business with China, as China will do business with the outside world. The Chinese must realize that despite its overall economic strength, it is still a largely developing country, and is export dependent. The India-China trade is around $60 billion and is poised to expand much more. China holds a huge trade advantage over India, and its exports are manufactured low cost industrial goods. Chinese misbehaviour with Indian businessmen and diplomats may cause them to lose substantial portion of this market eventually. It is not only India, but many other countries have complained about China’s business ethics.

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SAAG is the South Asia Analysis Group, a non-profit, non-commercial think tank. The objective of SAAG is to advance strategic analysis and contribute to the expansion of knowledge of Indian and International security and promote public understanding.

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