Knowing full well that "fattening up before killing," why do Chinese companies still invest and set up factories in India?

The risk is far too high—don’t keep putting eggs in this Indian basket, and even more don’t build your factory on a beach where the policies could flip at any moment!

I happened to come across an article, and after reading it, I felt stifled and couldn’t help but mutter a few things. The article says the Indian government directly denied product certification for China-made cameras, along with various kinds of surveillance and monitoring equipment.

From now on, our kind of goods won’t be able to be sold normally in the Indian market, and even entry eligibility has been stripped away. The article also specifically mentioned Hikvision—an enterprise well known in the global security and surveillance field. In the past, its factories in India could reliably produce 2 million units of equipment every month.

Now that this ban has hit, with no other way out, they can only find local Indian partners to cooperate, handing over their own capacity and technology. Anyone with a clear eye can see the helplessness and frustration in it.

Sigh…

News like this, Southsheng has seen countless times. The cases where our companies in India suffer dull losses and fall into major setbacks are truly numberless—from phones and consumer electronics to power equipment, from internet applications to physical manufacturing. In which industry hasn’t something like this happened?

No need to look up information on purpose—just pay a little attention to news about overseas companies, and you already know the truth as if it were right in front of you: the Indian government has always treated Chinese companies with an attitude that everyone knows, summed up as “nourish you first, then slaughter you.”

They first fling open the doors wide, luring you in with all sorts of conditions that look exceptionally favorable. Once you pour real money into building factories, investing in technology, and expanding into the market—once you’ve developed the industry and secured your market share—then they immediately flip their face. They use “respectable” reasons like regulatory reviews, national security concerns, tax investigations, and certification restrictions, squeezing you and suppressing you step by step, until they either push you out of the market or force you to hand over core interests.

The logic is all clear, and the trap is laid out in full view. It can even be said that every overseas company knows this pattern in India. But I’ve never been able to understand—and I’ve always wanted to ask: if everyone already knows it’s a pit where, one careless step, you can lose everything you put in, why are there still so many companies in our country pressing ahead, one after another, into the Indian market—why would they willingly take this risk?

At the end of the day, it all comes down to one “interest” word.

India has more than 1.4 billion people, and the share of young people is high. In any industry, when businesses see this kind of population base, the first reaction is that a huge consumption potential is hidden here—an enormous cake that hasn’t been fully carved up yet.

Looking back at the domestic market, every industry has already been worn down by relentless competition. Capacity is saturated, competition is fierce, and profit margins keep getting squeezed smaller and smaller. Companies need to grow and find new breakthroughs—going overseas is an inevitable choice.

From a global perspective, the US and Europe markets are certainly important, and next on the list is India—besides India, it’s hard to find another emerging market with such a massive scale. This temptation, in front of any company wanting to hit performance targets and expand, is hard to ignore.

Take security and surveillance equipment as an example. India’s domestic industry base is weak—technology can’t keep up, and capacity isn’t enough. China’s products have strong cost performance and reliable quality. Once you enter, it’s easy to open the market and capture a decent share. Hikvision originally saw this clearly, which is why it built plants and laid out its strategy locally, planning to earn money by putting down roots.

Besides the market, there’s also the matter of costs. India’s labor costs are very low, far lower than in China. For labor-intensive manufacturing, this can save a large amount of production costs. Add to that, during India’s early push of “Make in India,” the tax exemptions and land incentives that were offered—those sounded like nothing but good news. When companies crunch the numbers, they feel that as long as they can operate smoothly, profitability is a sure thing. Naturally, they’re willing to take a gamble.

Also, India’s market profits are said to be high—profit margins in some sectors can even be higher than in China. For instance, a Chinese wind power enterprise saw its gross margin on orders in India exceed that in China by more than 5 percentage points. For manufacturers in China’s industry sector, where “involution” is severe, that’s undoubtedly a huge temptation.

There’s another mindset that’s very common: follow the trend and gamble on luck.

When colleagues around you all go to India, while others there make money and capture market share, if you don’t move, you worry you’ll be left behind by competitors. You’re afraid of missing out on that so-called dividend. With everyone rushing in like a swarm, very few people can settle down and carefully, seriously assess the risks hidden behind India.

Many companies also carry a kind of arrogant confidence. They believe China’s manufacturing industry has a complete supply chain and mature technology, while India’s domestic industry can’t compare. Without China’s technology and products, they think, they can’t play the game. Even if the Indian government wants to crack down, they feel it has to weigh the consequences. They always think they won’t be the one being targeted, and that they won’t end up with the “nourished then slaughtered” outcome.

But they forget: India’s crackdown is never aimed at just one company—it’s a systematic strategy targeting the entire group of Chinese companies.

What they want is never fair cooperation to make money with you. Instead, they want to prop up their own domestic industries by using your investments and technology. Once your value is used up, they will, without hesitation, kick you aside.

Xiaomi has been working to build a presence in India for years and once held up half the market, but in the end its assets were frozen and its losses were severe. Major smartphone brands have been investigated one after another, with restrictions everywhere. And now Hikvision has encountered a certification ban and has been forced into cooperation and compromise. These examples, one after another, are all blood-red lessons.

Yet there are still people who think these tragedies only happen to others, and that they can be lucky enough to avoid them. That’s tragic…

We’re always thinking about investing in India, earning the profits from that market, thinking we can make some interest. But the accounting India is doing—from the very beginning—is your principal: the funds you invest, the core technology you bring, and the market you worked hard to build.

You bring sincerity and capital over, thinking it will be mutual benefit and win-win. But they treat you as a fat sheep to be slaughtered. Once you’re fattened up, they strike—wiping out years of investment. Either you’re forced to exit in humiliation, or you get at the mercy of others to be exploited, with no room to resist.

As I write this, Southsheng truly wants to offer a sincere reminder to our companies—a heartfelt warning: really don’t risk total destruction just for short-term gains right in front of you.

No matter how big India’s market potential is, it’s still just a “pie on paper.” It can never compare to the real importance of funding safety and industrial stability. Their policies can change from one day to the next, the business environment is chaotic, and hostility toward Chinese companies has never disappeared. The so-called preferential policies and cooperation sincerity are all temporary lures. Once you get trapped, it won’t be easy to pull yourself out.

Overseas expansion in itself isn’t wrong, and it’s inevitable for Chinese companies to move toward the global market. But we can absolutely choose directions that are more stable and more reliable. In Southeast Asia, the Middle East, Latin America, and Europe—where isn’t there a market worth developing? Where can’t we seek win-win cooperation? Why must we fixate on India, a place that’s full of pitfalls and hostility everywhere, and stake our hard-earned effort and capital in a market with zero credibility?

Don’t let the immediate benefits blind your eyes anymore. Don’t keep holding unrealistic hopes of luck. If you want to make money off others, others are watching your own principal. From the very beginning, this kind of deal is a losing one. Picking the right direction step by step and holding the risk bottom line matters far more than blindly chasing so-called market expansion.

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