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How china is taking advantages of coronavirus situation?

             We saw that the industrial output of any country decreased for the lockdown in this coronavirus situation. Now most of the countries are fighting with coronavirus. For this the condition of their economy and businesses is very bad. Stock markets of those countries are decreasing rapidly. So the valuation of the companies are also decreasing. In this situation china thinks to take advantages of coronavirus from other countries. China sees the situation as an opportunity and tries to use the best of this opportunity. They starts to aquire businesses of different sector from different countries. From first the main focus of china is always to invest heavily in the country when the country faces problems and gradually they start to control the country. If you are told about indian stock market then indian stock market decreased heavily. The share price of hdfc bank decreased 35% in the first quarter of FY 2020. For the reducing of share price of the stock market and these companies china gets the good companies in low valuation. Seeing the opportunity central bank of china recentle bought 1.75 crore shares or 1.01% stake of hdfc bank. After the transaction india became alert. India changed its fdi rules. There are many reasons behind the change of fdi rules. 

How china is taking advantages of coronavirus situation?

         The companies are struggling very much or facing problems because of the long term lockdown. For this the recession is going on in india. In this situation companies need a huge capital to fight with the situation. The US that was investing in india heavily is now facing problems for the coronavirus pandemic. So in this situation if india raises fund from china then it will be a wrong decision. For this indian goverment changed the FDI rules. After this if china or pakistan or Malaysia etc countries want to invest in India then they have to take the approval of indian government for any type of investment in India. Till now china is investing on the basis of automatic approval. It means china don't have to take any permission for the investment in india. And china took its full advantages. From last some years china was heavily investing on india.


         The other reason behind the changes of fdi rules is Hostile Takeover. In hostile takeover companies are taken over without company's permission. It means they buy the shares of the companies from the stock exchange and gradually they start to control the company. It is the fear of many coumtries that if the share price of any company of their coumtry decreases heavily for the lockdown then china can buy its shares in low valuation and they can takeover the companies in hostile way. According to the new fdi rules if china and other countries want to invest in india or they want to sell their existing stock then they have to take permissions from indian government.  Such as many chinese companies like alibaba, tencent, bytedance (parent company of tiktok) etc invested heavily in indian companies.  Recent fosun,a big company of chaina aquired a indian pharmaceutical company, gland pharma. They bought its 74% stake by paying 1.09 billion dollars or about more than 7000 crore rupees. Besides this alibaba and ant financial (the affiliate company of alibaba) invested heavily in indian companies. 


           There are 31 unicorns in india. Unicorns means the startups that have the valuation of minimum 1 billion dollars or 7000 crore rupees. China invested heavily in 18 startups of these 31 unicorns. Chinese companies were heavily investing in indian tech companies from last some years. Alibaba have 23% stake in zomato and alibaba also invested in bigbasket, snapdeal, paytm, paytm mall, xpressbees etc. Tencent also heavily invested in indian companies. They have heavily investment on mx player, udan, khatabook, byju's, ola, swiggy, ganna, neo, hike, practo, dream 11 etc startups. Bytedance (parent company of tiktok) invested 25 million dollar in dailyhunt,a news aggregate company. And fosun invested in delhigo,ixigo etc startups. In automobile sector MG motors, ultimately a chinese company are plaanning to grow their operations eapidly in india. We know well the reality of china. So many indian avoid the use of chinese products. 


              For this china does back door entry. For example bytedance have a famous news aggregate company in china,named toutiao. They didn't launch the toutiao in india. Instead of this they took the stake in indian news aggregate company,dailyhunt. Alibaba also did the same thing. Alibaba's tmall that is also known taobao is the popular company in china. But they didn't introduce tmall in india. Instead of this alibaba thought to invest in paytm mall. If you want to know about the investment capacity of china then you are informed that now they have 3 trillion dollars of foreign exchange reserve( 228 lakh crore rupees). You can surely understand how much huge capital is available to china as a foreign exchange reserves? And china is planning to use the capital in those companies that are available in low valuation because of the coronavirus pandemic.


          Many chinese companies are blamed that they share user's data with chinese goverment. And india have the same risk. Huawei, a tele-communication and electronic equipment company is blamed by US and other countries that it shares all the user information with the goverment. After this many countries blocked it in their country. Japan, australia already blocked huawei. India does take any action till now on it. Military of canada requested to canada government to block huawei in their country. We know very well that china, chinese government and chinese companies didn't tell anything transparently. And the whole world come to know the fact very well. For this india and many european countries alerted about this. 


           In europe the situation of european countries is also bad. Companies of france, italy, spain are struggling to out of the situation.  The big players in european countries like nokia, ericsson 's stock also decreased. So european countries don't want that china aquire these companies or occupies its stake. For this germany, italy, spain changed their fdi rules so that china can't aquire the companies in hostile way. The relation between china and US is not good from first. Recently when a chinese company went to us to aquire a us company then the deal wasn't accomplished for the interference of us government. Other countries have also a fear. China can execute any work forcing small countries if they become no 1 economy in the world.  


           China know very well that india and some other companies can survive in this situation without chinese fund. But other countries that will face huge problems can not reject the chinese fund. And chaina is waiting for the situation. If the impact of coronavirus will increase in african countries then china will start their game of controlling african countries. China invested heavily in african countries from last some years. China have the biggest trading power in the world. Last year china did the trade of 4.43 trillion dollars. Where US did the trade of 3.89 trillion dollars. And china focuses to increase their stake in africa. For african and pakistan countries the strategy of china is very simple. China first develops their infrastructure well. Such as they make roads, highways, flyovers etc in those poor countries. Those countries think that they get a good developer partner who wants to develop their country. Gradually debt is increasing upon the countries. And china waits for the situation. They don't understand that china helps them because china wants to export their products most in those countries. When the debt prove a burden for the countries then the countries can do anything as china orders. As for example, china's focus is now to use the natural resources of pakistan and export their products in pakistan. There is a recent example of What can china do with other countries. China is testing the vaccine of covid-19 virus. And they started to test it in the citizens of pakistan. Because if there happens any problem or any death then they are the citizens of other countries. 


         Many chinese smartphone companies like oppo, vivo, mi etc are performing good in many countries. Tiktok (chinese app) is the most popular app in india. After tiktok bytedance (tiktok's parent company) launched also 'helo' in india. It also gets a good response and many indian uses it. It is not known to most of people that data is a new currency in modern world. Chinese companies shares the user data with their goverment. In china if any journalist tells against goverment then he/she will be sentenced in prison. Chinese companies can do anything in the order of goverment because they just want to run their business. Tiktok is free but chinese government can know about the behavioural pattern of users because of it. If you see the smartphone market in india then you see that more than 50% of smartphone market is led by chinese companies like oppo, vivo, mi etc. So indian should make distance from it. The things don't go easily from us but we should try. And we should do capital investment. Because when indian companies need capital then most of the time they collect fund from venture capital(vc) or hedge fund or private equity fund or other investors of foreign countries. 


          Most of the capitals are either invested in gold, silver or stay as cash. If any company wants to produce new products then they will need capital. And if the capital is given from india then it will be good for india. You observe that most of the start-ups collects funds from US and china. So if every indian should invest minimum 5%-10% of their income in every month. A big manufacturing opportunity comes to india. If we don't utilize the opportunity then it will be a great mistake. Many countries don't know the reality of china. But the spread of coronavirus disclosed the real face of china to the world. So they want to reduce their business relations with china. And the process already started. South korean company, hyundai steel already stopped its chinese manufacturing factory. And now they are planning to shift their company to india. For this they are finding 5000 acres lands in andhra pradesh. Besides this other companies moves their factory to india. Japan gave about 2.2 billion dollar or about 20,000 crore rupees package to japanese companies just to stop their operations in china and exit from china. There are about 1441 japanese companies in india. Most od the country are located in bangalore. Recently indian government declares that they will give permissions for the manufacturing projects as soon as possible. And if it is done then many youngsters get jobs and many persons can start their manufacturing businesses. And till now manufacturing operations create most of the job in india. In IT outsourcing india is the leader. TCS,second largest company of india is fully based on IT. It means it takes the IT projects of foreign countries. We watched that about 20-25 years ago a it boom was happened. Then many IT companies became big. And the same boom is coming in manufacturing sector. India have also men power. So the facilities chines government gave to companies of other countries for their manufacturing set up can be also given by indian government. So we should capitalize the whole opportunity. 


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Best wishes to invest.



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