When a group of men broke into a restaurant in the southern Chinese trading hub of Yiwu on the night of May 19, Mumbai-based trader Danish Qureshi had little inkling that it was him they were after.

Bundled into a car and driven away, Mr. Qureshi would spend five days in captivity, facing maltreatment and abuse at the hands of local traders.

After a five-day ordeal, he was finally freed on Friday morning following a raid by the local police, who had been tipped off by the Indian consulate in Shanghai. Mr. Qureshi arrived safely back in India on Friday night, after the Consulate arranged for him to get on an Air India flight from Shanghai to New Delhi.

While much is unclear about his abduction, his case has once again shed light on the uncompromising business environment in the trading hubs of southern China. Yiwu, a major marketplace, was also the site of a bitter dispute in December that saw two Indian traders, Deepak Raheja and Shyamsunder Agarwal, spend two weeks in captivity and face abuse from local suppliers who accused them of owing more than 10 million RMB ($1.58 million). They are now awaiting judgment from a local court.

Indian officials were told that Mr. Qureshi's abduction was a case of mistaken identity and he was not involved in any commercial dispute. The accounts they heard could not be verified. Local authorities in Yiwu could not be reached on Friday.

Asked about the case, Chinese Foreign Ministry spokesperson Hong Lei said: “I am very happy to say that the case has been properly handled. China welcomes foreigners, including Indian businessmen, to do business in China and is willing to protect their lawful rights and interests.”

Indian officials were keen to quickly resolve the case. A long-drawn-out legal and diplomatic row over the case of Mr. Raheja and Mr. Agarwal strained relations earlier this year, including leading to the postponement of a visit of a delegation from Zhejiang province, where Yiwu is located.

Officials also did not want the dispute to cast a shadow over the scheduled visit of External Affairs Minister S.M. Krishna for the Shanghai Cooperation Organisation's (SCO) Beijing Summit on June 6.

Mr. Krishna's last visit, for the inauguration of a new Indian embassy building and for high-level talks with the Chinese leadership, was overshadowed by the first Yiwu dispute.

The Indian embassy in Beijing this week put out a second advisory, warning Indian businessmen of the dangers of doing business in Yiwu.

This followed the filing of fresh charges against Mr. Raheja and Mr. Agarwal, accusing them of owing a further 1.6 million RMB (Rs. 1.39 crore). The advisory warned of “a high possibility of fresh cases being lodged in order to exert additional pressure on Indian businessmen.”

The Chinese Foreign Ministry here hit out at the advisory, saying it was “not conducive to resolving the relevant issue and will also affect normal trade and economic exchanges between China and India.”

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