Fahad Khateeb, the owner of a light manufacturing business in Mumbai, says that he and a number of other companies in a manufacturing association he is a member of, are actively trying to stop importing Chinese components for their products, as tensions rise over a Himalayan border dispute.
“A trade war is almost happening as of now – it’s not just a possibility,” says Mr Khateeb. “Indians are giving very serious thought to cutting down imports from China as much as possible.”
He says Chinese imports account for 20 per cent of the components of his products.
“We’re now trying to use Indian counterparts that do the same thing as the Chinese manufacturers, and apart from that we have other countries we can import from – there’s Taiwan, South Korea, so we’re looking at importing directly from there.”
Tensions between India and China have been escalating in recent weeks over a border dispute. The two countries are locked in a stand-off, after Chinese construction workers in June started to extend a road in a disputed Himalayan territory, which Bhutan – an ally of India’s – and China both claim as their own. India deployed troops to the Doklam area to bring the work to a halt, prompting accusations by China that India was trespassing and leading it to post its own forces in a nearby area.
China is India’s largest trading partner, with total trade between the two countries reaching almost US$71 billion last year. This is skewed towards imports from China into India, given the low prices and availability of Chinese goods, with imports of over $58bn into India last year.
In terms of trade, electronic components, chemicals and plastics are among the main goods imported from China. Cotton and petroleum products are some of the main items that are exported from India
Chinese state media have said that there is a “looming” trade war because New Delhi this month imposed anti-dumping duties on 93 products from China.
But any impact could be short-lived and limited given the extent of India’s dependence on China for goods, some point out.
“Trade between India and China is part of an ancient trading route that has survived all types of tensions for centuries,” says Suhail Nathani, the managing partner at Mumbai-based Economic Laws Practice. “The synergies of trade between India and China will overcome any aberration.”
Investment from China into India, which has been expanding, could also be under threat because of the row, lawyers say.
India has been stalling on approving a planned takeover worth more than $1bn by China’s Shanghai Fosun Pharmaceutical of Indian drugmaker, Gland Pharma, which is based in Hyderabad. The deal was announced in July last year, and is awaiting the go-ahead by the Indian government’s Cabinet Committee on Economic Affairs.
“There is some uncertainty on which way the Indian government will lean, given the recent geopolitical tension with China – from a timing perspective the deal seems to have got stuck in the middle of it,” says Kartick Maheshwari, a partner at Khaitan & Co, an Indian law firm.
India is planning to reject the deal, according to Bloomberg, citing unnamed sources familiar with the matter.
Industry insiders have suggested that beyond the impact of the border dispute, there may be reluctance on New Delhi’s part to give up control of the production of important medicines used for export and in the local market to a foreign company.
If the deal was to go ahead, this would be the largest takeover of an Indian company by a Chinese firm.
Although China and India relations have long been frosty, Chinese investment into India has been on the rise in the past few years. Chinese internet retail company Alibaba and Beijing-based smartphone manufacturer Xiaomi are among Chinese firms that have been ploughing investment into India.
Alibaba has invested in Paytm, an Indian mobile wallet that has surged in popularity after the prime minister Narendra Modi’s demonetisation move towards a less cash-based economy.
Another Chinese internet major, Tencent, has also been looking to capitalise on India’s growing e-commerce market. In April, it teamed up with eBay and Microsoft to invest $1.4bn into the popular online Indian retailer Flipkart.
“Investment is going to take a direct hit at least in the next couple of months,” says Mr Khateeb.
Chinese companies are also focusing on the smartphones business in India. Xiaomi is producing phones at two manufacturing facilities in the state of Andhra Pradesh in southern India. Another Chinese smartphone maker, Vivo, is manufacturing in the country and looking to grow its presence, while China’s Oppo also has investment plans for the market.
In a clear sign of the extent of China’s move into India, Oppo took over the sponsorship of the Indian cricket team this year in the cricket-obssessed nation, while Vivo is the title sponsor of the Indian Premier League cricket tournament.
Meanwhile, Chinese developers are interested in India. Dalian Wanda Group, owned by China’s richest man Wang Jianlin, last year announced plans to develop a $10bn industrial zone in Haryana in northern India.
Indian investment in China is at relatively low levels. But a record figure of more than $1 billion of foreign direct investment flowed into India from China last year, according to data from the Indian government.
Since coming to office in 2014, Mr Modi has signalled an eagerness to strengthen economic ties with China and encourage investment into areas including infrastructure, an area that China is keen to invest in.
Mr Modi has spoken of the importance of a “look east, link west” policy, although he has also referred to the relationship with China as “complex”.
China and India signed $22bn of business deals in sectors including solar energy during Mr Modi’s visit to China in 2015.
Mr Khateeb explains that there could be a silver lining for the Indian economy as a result of any reduction in imports from China, as one of the main ambitions of the government is to transform the country into a global manufacturing hub.
“Being a manufacturer myself, I would prefer that imports from China are cut to size, so that Indian manufacturers are able to showcase what their capabilities are, not only in India, but abroad,” he said.
KEY DEVELOPMENTS IN MARITIME DISPUTE
2000: Israel withdraws from Lebanon after nearly 30 years without an officially demarcated border. The UN establishes the Blue Line to act as the frontier.
2007: Lebanon and Cyprus define their respective exclusive economic zones to facilitate oil and gas exploration. Israel uses this to define its EEZ with Cyprus
2011: Lebanon disputes Israeli-proposed line and submits documents to UN showing different EEZ. Cyprus offers to mediate without much progress.
2018: Lebanon signs first offshore oil and gas licencing deal with consortium of France’s Total, Italy’s Eni and Russia’s Novatek.
2018-2019: US seeks to mediate between Israel and Lebanon to prevent clashes over oil and gas resources.
Company%20profile
%3Cp%3EName%3A%20Tabby%3Cbr%3EFounded%3A%20August%202019%3B%20platform%20went%20live%20in%20February%202020%3Cbr%3EFounder%2FCEO%3A%20Hosam%20Arab%2C%20co-founder%3A%20Daniil%20Barkalov%3Cbr%3EBased%3A%20Dubai%2C%20UAE%3Cbr%3ESector%3A%20Payments%3Cbr%3ESize%3A%2040-50%20employees%3Cbr%3EStage%3A%20Series%20A%3Cbr%3EInvestors%3A%20Arbor%20Ventures%2C%20Mubadala%20Capital%2C%20Wamda%20Capital%2C%20STV%2C%20Raed%20Ventures%2C%20Global%20Founders%20Capital%2C%20JIMCO%2C%20Global%20Ventures%2C%20Venture%20Souq%2C%20Outliers%20VC%2C%20MSA%20Capital%2C%20HOF%20and%20AB%20Accelerator.%3Cbr%3E%3C%2Fp%3E%0A
The specs
Engine: 2.0-litre 4-cylinder turbo
Power: 258hp from 5,000-6,500rpm
Torque: 400Nm from 1,550-4,000rpm
Transmission: Eight-speed auto
Fuel consumption: 6.1L/100km
Price: from Dh362,500
On sale: now
Factfile on Garbine Muguruza:
Name: Garbine Muguruza (ESP)
World ranking: 15 (will rise to 5 on Monday)
Date of birth: October 8, 1993
Place of birth: Caracas, Venezuela
Place of residence: Geneva, Switzerland
Height: 6ft (1.82m)
Career singles titles: 4
Grand Slam titles: 2 (French Open 2016, Wimbledon 2017)
Career prize money: $13,928,719
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
MATCH INFO
Manchester United 1 (Rashford 36')
Liverpool 1 (Lallana 84')
Man of the match: Marcus Rashford (Manchester United)
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
Difference between fractional ownership and timeshare
Although similar in its appearance, the concept of a fractional title deed is unlike that of a timeshare, which usually involves multiple investors buying “time” in a property whereby the owner has the right to occupation for a specified period of time in any year, as opposed to the actual real estate, said John Peacock, Head of Indirect Tax and Conveyancing, BSA Ahmad Bin Hezeem & Associates, a law firm.
UAE v Gibraltar
What: International friendly
When: 7pm kick off
Where: Rugby Park, Dubai Sports City
Admission: Free
Online: The match will be broadcast live on Dubai Exiles’ Facebook page
UAE squad: Lucas Waddington (Dubai Exiles), Gio Fourie (Exiles), Craig Nutt (Abu Dhabi Harlequins), Phil Brady (Harlequins), Daniel Perry (Dubai Hurricanes), Esekaia Dranibota (Harlequins), Matt Mills (Exiles), Jaen Botes (Exiles), Kristian Stinson (Exiles), Murray Reason (Abu Dhabi Saracens), Dave Knight (Hurricanes), Ross Samson (Jebel Ali Dragons), DuRandt Gerber (Exiles), Saki Naisau (Dragons), Andrew Powell (Hurricanes), Emosi Vacanau (Harlequins), Niko Volavola (Dragons), Matt Richards (Dragons), Luke Stevenson (Harlequins), Josh Ives (Dubai Sports City Eagles), Sean Stevens (Saracens), Thinus Steyn (Exiles)
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
