Chinese production continues despite tech transfer curbs

Kolkata: Chinese brands continue to press ahead with their India expansion plans despite concerns over Beijing's tightening control over supply chains and overseas investments, as per leading electronics contract manufacturers including Dixon Technologies, Epack Durable and Bhagwati Products.

Companies such as Hisense, Haier, Itel, Infinix, Motorola and Oppo are scaling up local manufacturing, broadening product portfolios and stepping up exports from India, executives told analysts in recent earnings calls.

Epack Durable chief executive Ajay DD Singhania said the company has not seen any indication on ground of policy changes or restrictions from the Chinese government on companies investing overseas, including in India.


"On the contrary, we see Hisense (for whom it manufactures) becoming much more ambitious about building a significant market position in India. The scale-up in its distribution network and market presence clearly reflects its intent to emerge as one of the market leaders in the years ahead," he said.

Bhagwati Products director Rajesh Agarwal told ET that business is normal, and its Chinese clients are expanding production here.

Hisense is scaling up India production and distribution while expanding from just televisions to refrigerators and air-conditioners. A sponsor of the FIFA World Cup, it is investing heavily behind its television business in India ahead of the tournament. The company is also set to begin exports to West Asia and Africa from Epack Durable's manufacturing facilities.

Haier, which has been operating in India through a joint venture with Bharti Enterprises and Warburg Pincus since December, is close to finalising plans for a third manufacturing plant involving an investment of about ₹3,000 crore. The project had remained stalled for nearly two years as funding from its Chinese parent awaited government approval under Press Note 3, a rule which requires government approval for investments originating from countries sharing a land border with India, such as China.

China introduced a new supply-chain control regime in April and Beijing further strengthened the framework last week by empowering authorities to regulate or block technology transfers, cross-border movement of technical personnel and overseas transactions involving strategic assets in sensitive sectors such as artificial intelligence and advanced manufacturing, as part of efforts to safeguard the country's technological edge.

Industry executives said the measures are aimed at protecting critical technologies like AI and are unlikely to affect routine contract manufacturing or sales expansion by Chinese electronics companies in markets such as India.

Dixon's JV with Ismartu is set to start exporting mobile phones to Africa this year, while production for Motorola and Oppo is going up for exports despite a year-on-year fall in India's smartphone market following price increases.

Dixon managing director Atul Lall said the company's partnerships with key customers such as Motorola and Oppo are deepening. "We expect volume growth this fiscal and a larger share of business across all these relationships," he said.