Doing business successfully in China, Sagnik Roy's way

China has emerged as the world's fourth largest economy

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.

"Sometimes you buy a share that may not be doing well, but is one that you believe has some potential," said Sagnik Roy, leaning back against a cushioned chair in an east Beijing coffee shop. The 45-year-old Bengali was explaining the decision he took, back in 1986, to do a degree in Sinology at Shantiniketan's Cheena Bhavan.

This was a decision that marked the beginning of a winding journey that eventually led this middle-class boy from Durgapur to become, perhaps, the most successful Indian industrialist in China and the only Indian to partly own a Chinese industrial conglomerate.

Part of a conglomerate

The son of a Left-leaning university professor, Mr. Roy joined the Chinese studies programme in Shantiniketan at a time when there were more professors than students. He became one of only five students in the entire department, going on to focus his studies on Taoism.

There was still at least a decade to go before either China or India began to be seen as potential economic giants. Bilateral trade between the two countries in 1990 stood at an unimposing $260 million. This was also the year that Mr. Roy moved to China as part of a scholar exchange programme that won him a place to study at Beijing's Language and Culture University.

The Beijing that Mr. Roy moved to was a city that was vastly different from the gleaming Olympic metropolis of today. "By comparison, India was much more luxurious," he recalled. "In Beijing, you couldn't even buy simple things like sliced bread and butter. There were no supermarkets; restaurants closed at seven. People used to boast if they had a toilet in their homes."

There may not have been much to buy in the China of the time, but for Mr. Roy this was just as well given that he had virtually no money to buy anything with. He recounted how he arrived in China with exactly $20 in his pocket and scrimped his way through the next year on the small scholarship he received from the university.

Although originally planning to return to India at the end of his year of study abroad, opportunity knocked on his door in the shape of a well-paid job offer with an American company called Capital Resources. The company traded in minerals and other natural resources and Mr. Roy became involved in their India-related projects.

Over the course of the two years that Mr. Roy working for Capital Resources he became familiar with their modus operandi. "They would, for example, tell Indian suppliers of iron ore: `We are an American company and so are more credible than the Chinese. If you go through us we share the risk,'" explained Mr. Roy.

It dawned on the young executive that there was virtually zero direct trading between India and China. Everything that was traded went through middlemen, usually Japanese or American firms.

Senses an opportunity

Mr. Roy sniffed an opportunity in this situation and quit his job to start-up his own trading outfit in partnership with a few Indian friends. "We tried trading everything from caps to gunny bags and iron ore, but nothing worked for almost two years," he reminisced.

His outfit was on the verge of bankruptcy when a company from Shanxi placed an order with him to source $1.5 million worth of iron ore from India. That order was a turning point for Mr. Roy's fortunes.

"After that, we never looked back. Our strategy was basically to tell Chinese buyers, `India and China are both poor countries so why give 5 per cent to a Japanese or American company?'"

This was a line of reasoning that found its mark and before long Mr. Roy had more orders than he could fill.

In the meantime, the Bengali's ties with China were thickening. While still working with Capital Resources, he had met a Chinese lawyer called Tian Fu, a girl he eventually married in a small ceremony in 1996.

There were no objections to the match from either family. By this time Mr. Roy had blended in culturally with the Chinese. He not only spoke the language fluently, but had even developed a yen for Chinese delicacies like "100 yearold- eggs"; very much an acquired taste.

In 2000, Mr. Roy, along with his wife and two other family members, bought into the Yongtong industrial group. Today the Indian is the only foreigner among the group's 18 directors.

In 2007, the Yongtong group boasted a $700 million turnover. It owns 33 textile mills across China in addition to jade quarries and interests in tyres and copper.

When asked if he ever felt the odd man out, being the only foreigner in the company, Mr. Roy laughed. "No one considers me a foreigner. They see me as Chinese. This is good, of course, but it also means I get none of the privileges associated with being a foreigner either!"

Back in the mid-1980s when he decided to study Chinese and thus buy into "a share that wasn't doing well but had potential" people in India thought he was crazy. Today, it's the same folk who look at him with admiration. Over the last two decades, China has emerged as the world's fourth largest economy and Sino-Indian trade has been rocketing, worth a weighty $38.6 billion in 2007.

While Mr. Roy believes the growing economic engagement between India and China to be a force for good given that "more economic dependence lessens political tensions," he feels that Indian businesses in China continue to make many mistakes.

`Do your homework'

Chief among these, he said, are a failure to "do one's homework and a reluctance to take the help of professionals."

Another key problem he identified was that the majority of Indian executives in China tended to live in ghettos. They remained within their comfort zones, rarely making the effort to learn Chinese or even to eat with chopsticks.

There is however, at least one Indian in China who does not suffer from this problem. As our interview wound down, Roy's mobile phone rang. He picked it up and spoke in rapid fire Mandarin. Hanging up, he took a quick last slurp of his gently fragrant jasmine tea and said goodbye.

Mr. Roy had to return home to attend to his 10- month-old daughter, Rhea, a baby Chindia for whom the future is wide open and whose story might yet trump even her father's.

Source: The Hindu