Indian Market, Tempting but Challenging

On 19 May, Chinese Premier Li Keqiang arrived in India for his first state visit after he took office. The next day, China and India made a joint statement on cooperation in economy, culture, education and technology. It is spcially mentioned that bilateral trade volume is expected to surpass 100 billion USD by 2015. To promote trade cooperation, personnel exchanges and interconnection, the two cuntries agree to simplify visa procedures and strengthen border trade.

    China and India are neighbors and two giant developing countries with populations of over 1 billion. It is beneficial for both countries to build stronger trust and cooperation.

    For a long time, toy trade between China and India remains flat due to historical, religious and regional protectionism problems. According to offiial statistics, Guangdong's toy export to India has reached 47.68 million USD in 2012, only taking up 0.36% of the overall value of Guangdong's toy export, much less than the toy export value to Philippines, SIngapores, UAE, Malaysia, Saudi Arabia and Indonesia.

    It is needless to say that Indian market features an enormous potential. First of all, India has a large with a high percentage of kids. India has about 387 million children under age 14, accounting for 32% Indian population. Compared with India, China has approximately 222 million children under age 14, only taking up 16.6% of Chinese population. According to a report released by the United Nations Population Fund, Indian population will surpass Chinese population and become the largest in the world by 2025. Secondly, India enjoys rapid economic growth. It started economic reform since 1991 and become "I" of the "BRICS". By 2030, India will rank third in the world by GDP, following United States and China. Thirdly, Indian toy demand grows fast. Its annual sales have reached 9 billion RMB. Because of relatives weak local toy industry, nearly 80% toys on Indian market are imported.

   Of course, trade barriers do exist. One is Indian government shows strong intention of protecting national industry. In January 2009, India banned toys imported from China for the following six months without any explanation. Although India loosened the ban on global certificated Chinese toys two months later under pressures from WTO and other parties, the incident became quite a scene. Secondly, India is a multinational country with complicated conditions. As a result, a partner that is familiar with local market is extremely important while tapping India. Toy giants such as Lego and Mattel chose to work closely with Indian transnational companies when they entered India at the very beginning. Thirdly, what Indian consumers love goes increasingly polarized between branded products and low-priced ones. To get rid of the "cheap" tag on Chinese toys, there is still a long way to go.

   With a stagnant market and severe export conditions, India is undoubtedly a tempting market for China's toy industry.