‘Official warnings triggered by a few disputes created unfounded misperceptions'

Recent warnings from local authorities about “untrustworthy” Indian businessmen and a spate of trading disputes sparked by financial strains of West Asian companies, some of which were run by Indians, have created an atmosphere of distrust and tension in one of China's largest trading towns, local traders say.

A website run by the Yiwu local government last month warned of “many Indian businessmen being involved in disputes” after one trader, named Ali, left China owing 16 million RMB ($ 2.5 million) to 145 businessmen.

The website reported that he had ordered 30 million RMB worth of goods between September and December, but subsequently disappeared.

Following the incident, police issued a warning to traders “to be careful of Indian businessmen.” The local authorities also cited a case two Indian businessmen, holding tourist visas, leaving China with 2.8 million RMB worth of goods two years ago.

In recent weeks, the kidnapping of two Indian traders — employed by a Yemeni national according to reports — by angry Chinese businessmen has further underscored rising strains in this tough trading town, leaving unclear future for the several hundred Indian businessmen who have worked here for decades with few problems.

Many local businesses in Yiwu have, in recent months, also been hit by falling orders from West Asia following the Arab Spring unrest. Many West Asian companies, Chinese traders said, had closed shop leaving dues running into millions of dollars unpaid. Some of the companies were managed or run by Indian employees.

“Business is down by 20 or 30 per cent, so there is a lot of anger here,” said one Chinese trader.

Although the two Indian traders were unlawfully abducted and abused in captivity over two weeks, there was little sympathy for them among many Chinese traders in Yiwu. On one Yiwu web portal frequented by local businessmen, a post discussing the recent case described Indians and Libyans as being the source of most trade disputes.

Indian traders here say the official warnings triggered by only a few disputes have created unfounded misperceptions.

“In India and in China, there are a few bad apples,” said one trader from New Delhi who has worked in Yiwu for eight years, during which he said he had faced “no problems”.

“Many Chinese exporters to India too often sell below quality goods, but we cannot tar everyone with the same brush. Many other Chinese I've worked with have been honest and trusting.”


Following the recent case, the Indian Embassy in Beijing issued an advisory, cautioning Indians not do business in Yiwu, warning that “when there are trade disputes… Indian businessmen/traders can be illegally held under detention and mistreated by Chinese businessmen.”

The Indian trader said he was unsure how the local authorities would respond to the warning, and feared it could risk fuelling further mutual suspicions instead of bridging gaps. Indian officials, however, said the advisory was needed to stress strongly that unlawful intimidation and kidnapping could not be tolerated.

The two Indian traders were detained by businessmen after the owner of their company, thought to be from Yemen, fled leaving more than 10 million RMB ($ 1.58 million) in unpaid dues.

Hong Lei, spokesperson of the Chinese Foreign Ministry, said on Wednesday the dispute was “only an individual case,” and that China hoped India would “educate Indian businessmen in China to abide by laws and regulations and conduct business in good faith.”

For Yiwu's Indians, however, the harsh treatment meted out to the two traders has only stirred fears, with the widely perceived close connections between local businessmen and the authorities, leaving unclear whether they would be provided any protection, either from police or by law, in the event of future disputes.

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