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Doing business successfully in China, Sagnik Roy's way

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Sagnik Roy who is possibly the most successful Indian industrialist in China today and certainly the only Indian to be part-owner of a Chinese industrial conglomerate.
Sagnik Roy who is possibly the most successful Indian industrialist in China today and certainly the only Indian to be part-owner of a Chinese industrial conglomerate.

China has emerged as the world's fourth largest economy

"Sometimes youbuy a share thatmay not be doingwell, but isone that you believe has somepotential," said Sagnik Roy,leaning back against a cushionedchair in an east Beijingcoffee shop. The 45-year-oldBengali was explaining thedecision he took, back in1986, to do a degree in Sinologyat Shantiniketan's CheenaBhavan.

This was a decision thatmarked the beginning of awinding journey that eventuallyled this middle-class boyfrom Durgapur to become,perhaps, the most successfulIndian industrialist in Chinaand the only Indian to partlyown a Chinese industrialconglomerate.

Part of a conglomerate

The son of a Left-leaninguniversity professor, Mr. Royjoined the Chinese studiesprogramme in Shantiniketanat a time when there weremore professors than students.He became one of onlyfive students in the entire department,going on to focushis studies on Taoism.

There was still at least adecade to go before eitherChina or India began to beseen as potential economicgiants. Bilateral trade betweenthe two countries in1990 stood at an unimposing$260 million. This was alsothe year that Mr. Roy movedto China as part of a scholarexchange programme thatwon him a place to study atBeijing's Language and CultureUniversity.

The Beijing that Mr. Roymoved to was a city that wasvastly different from thegleaming Olympic metropolisof today. "By comparison, Indiawas much more luxurious,"he recalled. "In Beijing,you couldn't even buy simplethings like sliced bread andbutter. There were no supermarkets;restaurants closedat seven. People used to boastif they had a toilet in theirhomes."

There may not have beenmuch to buy in the China ofthe time, but for Mr. Roy thiswas just as well given that hehad virtually no money to buyanything with. He recountedhow he arrived in China withexactly $20 in his pocket andscrimped his way through thenext year on the small scholarshiphe received from theuniversity.

Although originally planningto return to India at theend of his year of studyabroad, opportunity knockedon his door in the shape of awell-paid job offer with anAmerican company calledCapital Resources. The companytraded in minerals andother natural resources andMr. Roy became involved intheir India-related projects.

Over the course of the twoyears that Mr. Roy workingfor Capital Resources he becamefamiliar with their modusoperandi. "They would,for example, tell Indian suppliersof iron ore: `We are anAmerican company and soare more credible than theChinese. If you go through uswe share the risk,'" explainedMr. Roy.

It dawned on the young executivethat there was virtuallyzero direct tradingbetween India and China.Everything that was tradedwent through middlemen,usually Japanese or Americanfirms.

Senses an opportunityMr. Roy sniffed an opportunityin this situation andquit his job to start-up hisown trading outfit in partnershipwith a few Indianfriends. "We tried tradingeverything from caps to gunnybags and iron ore, butnothing worked for almosttwo years," he reminisced.

His outfit was on the vergeof bankruptcy when a companyfrom Shanxi placed an orderwith him to source $1.5million worth of iron orefrom India. That order was aturning point for Mr. Roy'sfortunes.

"After that, we neverlooked back. Our strategy wasbasically to tell Chinesebuyers, `India and China areboth poor countries so whygive 5 per cent to a Japaneseor American company?'"

This was a line of reasoningthat found its mark and beforelong Mr. Roy had moreorders than he could fill.

In the meantime, the Bengali'sties with China werethickening. While still workingwith Capital Resources,he had met a Chinese lawyercalled Tian Fu, a girl he eventuallymarried in a small ceremonyin 1996.

There were no objectionsto the match from either family.By this time Mr. Roy hadblended in culturally with theChinese. He not only spokethe language fluently, but hadeven developed a yen for Chinesedelicacies like "100 yearold-eggs"; very much an acquiredtaste.

In 2000, Mr. Roy, alongwith his wife and two otherfamily members, bought intothe Yongtong industrialgroup. Today the Indian is theonly foreigner among thegroup's 18 directors.

In 2007, the Yongtonggroup boasted a $700 millionturnover. It owns 33 textilemills across China in additionto jade quarries and interestsin tyres and copper.

When asked if he ever feltthe odd man out, being theonly foreigner in the company,Mr. Roy laughed. "No oneconsiders me a foreigner.They see me as Chinese. Thisis good, of course, but it alsomeans I get none of the privilegesassociated with being aforeigner either!"

Back in the mid-1980swhen he decided to studyChinese and thus buy into "ashare that wasn't doing wellbut had potential" people inIndia thought he was crazy.Today, it's the same folk wholook at him with admiration.Over the last two decades,China has emerged as theworld's fourth largest economyand Sino-Indian trade hasbeen rocketing, worth aweighty $38.6 billion in 2007.

While Mr. Roy believes thegrowing economic engagementbetween India and Chinato be a force for good giventhat "more economic dependencelessens political tensions,"he feels that Indianbusinesses in China continueto make many mistakes.

`Do your homework'Chief among these, he said,are a failure to "do one's homeworkand a reluctance totake the help of professionals."

Another key problem heidentified was that the majorityof Indian executives inChina tended to live in ghettos.They remained withintheir comfort zones, rarelymaking the effort to learnChinese or even to eat withchopsticks.

There is however, at leastone Indian in China who doesnot suffer from this problem.As our interview wounddown, Roy's mobile phonerang. He picked it up andspoke in rapid fire Mandarin.Hanging up, he took a quicklast slurp of his gently fragrantjasmine tea and saidgoodbye.

Mr. Roy had to returnhome to attend to his 10-month-old daughter, Rhea, ababy Chindia for whom thefuture is wide open andwhose story might yet trumpeven her father's.

PALLAVI AIYAR IN BEIJING


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