I was speaking to one of the biggest steel makers in India. They have the best in terms of technology, resources and of course people who are extremely committed and professional. Yet, when I want to buy large volumes of steel from them, I cannot – because China gives it to me cheaper.
I love these guys, but as a businessman what do you do, if someone gives you something of the same quality for cheaper? Well most people buy it – no wonder almost everything we use is Made in China, including the laptop I am writing this on and almost certainly the device you are using to read it.
When I spoke to the Indian Steel maker, I found out that the reason China is selling everything so much cheaper, is because their local economy is finished. There is almost no demand there, as they have already done so much more than needed. For example, their steel production is almost ten times of India and they make almost fifty percent of the world’s steel.
They have built roads, buildings and cities that are lying vacant – but yet they can’t stop producing steel. If they stop production, millions of people in China will be jobless, there will be social chaos – imagine what happens to hundreds of million people if these factories shut down? It will be bad for China and will be terrible for the world. So instead of shutting down production, the Chinese Government is making sure they keep selling steel to the world – even though in net terms they are losing money.
It is better to lose money, then risk creating a massive immediate problem. Now, how does a great company in India, compete with someone who is willing to lose money? The simple answer is they can’t – unless the government puts tariffs on China and protects them. What is happening is steel is almost there for all products in China. It grew faster than any country in the history of mankind, it was economic growth on steroids – but now they have over-production is every product. They produce a lot more of everything than they need.
Already the signs of this threat are showing, with them devaluing the Yuan so that they can sell goods cheaper to everybody – from India to the United States of America. Their stock markets are crashing and I sense if things are not bought under control now, they will be a big risk to the world.
The world needs to wake up and notice this before it is too late. If we don’t – you will see almost all local industry being finished, at the moment we are able to compete in a very small space – the high end, high quality space, but millions of people are employed elsewhere and these are the people that need to be protected. Everybody reading this needs to realize China is our biggest threat, even more deadly than an attack militarily, is an attack economically.
I know they are looking at the Indian market in a big way, as it is the largest market in the world – we need to be careful and need to take immediate steps looking at the future. We can take no action, once the damage is done. Look at what happened to the United States of America because of China – they owe trillions of dollars to the world because manufacturing shut down and didn’t invest on the right things.
Source– Moneycontrol.com in association with Yogesh Chabria ( bestselling author and entrepreneur)