Two Indian companies, both in the automotive components sector, have for the first time posted profits from their China operations last year, signaling a possible turnaround for Indian firms which have long struggled to make their presence felt in the competitive China market. Sundram Fasteners’ hi-tensile fastener manufacturing facility in southern Zhejiang province, which opened in 2006, recorded profits for the first time in 2010 on the back of rising demand from China-based multinational corporations.
This followed Bharat Forge, India’s biggest automotive forging company, also recording profits last year for the first time, from its joint venture with China’s FAW Forging Company in Changchun in northern China, which was also set up in 2006.
Sundram Fasteners’ improved performance last year, following five years of limited success in breaking into the China market, was a result of “the right strategy, at the right time, with the right market segment,” according to its country head R. Premkumar.
He said the company had consolidated its position with multinational corporations with operations in China like Caterpillar, Volvo and John Deere, and increased its focus on the domestic market.
The company’s growth in 2010 marked a more than 35 per cent rise from two years ago, when the recession, as well as anti-dumping measures, hit the company’s exports to Europe. Its sales have since been revived by increasing demand for machinery in China’s fast-expanding construction sector, which has grown on the back of rising investments in infrastructure following the $586 billion stimulus plan, unveiled in late 2008. Last year also saw the first profits for FAW Bharat Forge, since its $90 million Changchun facility went into operation five years ago.
The automotive market in China has boomed in the past year, with the country surpassing the U.S. as the world’s biggest car market. Car sales rose by more than 25 per cent last year.
The two results indicated that China’s auto components sector offered opportunities for Indian companies which had the expertise and were competitive in niche sectors, said E.B. Rajesh, Chief Representative of the Confederation of Indian Industry (CII) in China.
“It is a positive sign that Indian investments that happened five years ago are starting to show results,” he said. “This will …
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