Archive for October, 2016

05/10/2016

Why are millions of Indians marching in silence? – BBC News

It is a unique protest: the silent marchers have no leaders; and they include the peasant and the professional. Women lead many of the marches; and politicians are not allowed to seize them. It is a sound of silence, says a commentator, that India can ill afford to ignore.

The protesters belong to the Maratha caste, one of India’s proudest – the warrior king Shivaji was one of them. Mostly farmers, they comprise more than a third of one of the population of Maharashtra, a relatively prosperous state, which is home, on one hand to Bollywood, thriving factories and farms and on the other, malnourished children and neglected tribespeople living in abject poverty.

Huge protests

The rape of a teenage Maratha girl allegedly by three low caste Dalit men triggered the silent marches in July. Then the protests expanded to include a demand for quotas in college seats and government jobs and a review of a 27-year-old federal law that protects Dalits and tribespeople from caste-related atrocities.

What is India’s caste system?

Why India’s farm communities are angryAfter more than 20 such rallies, the silent marchers – who call themselves the Maratha Revolutionary Silent Rallies – are expected to gather in the western Indian state capital, Mumbai, at the end of October. More than 10 million people are expected to participate in what could turn out to be one of largest protests in India in recent memory.

The upper-caste, largely land-owning Marathas have a handful of grumbles.

For one, they have turned their ire on the Dalits and tribespeople, alleging that the law to protect them has become a pretext to target the upper caste community, and lodge false cases against them. (The victims also get state compensation for as many as 47 offences against them.)

Image copyright VAISHALI GALIM

But this may not be an entirely truthful claim. Although dalits and tribespeople – India’s wretched of the earth – comprise 19% of Maharashtra’s population, but only 1% of the police complaints were filed by them last year, according to one report. Also the federal law was applicable in less than 40% of the complaints.

Social unrest

Clearly this disingenuous grievance masks a longer-standing demand: caste quotas in government jobs and seats in educational institutions. India’s Supreme Court has put a 50% cap on caste quotas, a limit that has already been reached in Maharashtra. Any concessions to the Marathas will mean that they will have to be officially labelled backward or less-privileged and the quotas will have to come at the expense of those for the less privileged castes. This could potentially trigger off bloody caste wars in the state.

The silent marchers of Maharashtra point to a host of structural infirmities afflicting India, which, if not resolved in time, could stoke widespread social unrest.

Growing inequity and decades of flagrant cronyism has meant that power and wealth continue to belong to a few.

The majority of colleges, cooperative banks and sugar factories in Maharashtra, for example, are owned by a clutch of politicians. According to one estimate, 3,000 families own more than 70% of all the farms in the state. The majority of the state’s 18 chief ministers have been Marathas. Half of its lawmakers belong to the community as well.

Image copyright MANSI THAPLIYAL Maratha farmers have taken their lives after they failed to repay debts

But caste and class don’t often coalesce in India, and the Marathas, like other upper caste communities have mixed fortunes: they are the educated elite and the rich farmers, but they are also the struggling small and landless farmers and farm workers. More than a third of Marathas are landless, according to one estimate.

It is the “lower and middle-rung Marathas who feel isolated, neglected, marginalised in the job market and denied opportunities in higher education,” in a fast-changing country, as commentator Kumar Ketkar points out in this perceptive essay on the ongoing protests.

The silent marches also shine a spotlight on its looming farm crisis as farmer incomes plummet due to expensive feedstuff, fertiliser, labour and erratic crop prices.

Frustration

Plot sizes have also shrunk, making farming unrewarding. Most of India’s farms are rain fed, and irregular weather changes are playing havoc with crops as rivers are drying up, and drought is common. Farmers are often left to fend for themselves and have no skills for jobs in India’s services-based economy. Aspiration is turning into frustration.

The Maratha protests also point to how India is veering towards what sociologist Andre Beteille called a “populist democracy” where social and political life are influenced by group identities and loyalties. “Problems arise when the loyalties of kinship and community are allowed to distort and override the demands of constitutional government,” wrote Professor Beteille.

Image copyright MANSI THAPLIYAL Farming is becoming an unrewarding profession

Many believe India’s quotas for seats and jobs are in a sordid mess of its own making.

It is indisputable that affirmative action is essential for communities like dalits and tribespeople who have been historically wronged. But extending it to other castes recklessly can distort matters.

How much burden of quotas can a state bear without being weakened irreparably? India needs jobs – and fast – and skills training if it has to avoid the social unrest that could blight a developing nation. Otherwise, the marchers of Maharashtra may not remain silent for long.

Source: Why are millions of Indians marching in silence? – BBC News

05/10/2016

Transforming lives in India’s manufacturing hubs – BBC News

By day she works as an assistant engineer, leading a team of 10 in a car factory manufacturing parts for Renault-Nissan Alliance vehicles.

The Make in India scheme aims to make the country a global manufacturing hub

Like hundreds of thousands of people across India, Sujitha‘s journey from an under-developed village in India’s south to the outskirts of the city of Chennai (Madras), has transformed her life.

“My native place is a small village called Kizhattur. There is not even proper transport over there,” says Sujitha. “Because I grew up in that situation, I knew that I had to study hard and find a job.”

And she did just that – albeit against the wishes of her family who wanted her to marry and settle down.Sujitha secured a diploma and when Renault-Nissan advertised a position for a junior engineer five years ago, she jumped at the opportunity.”I can’t even imagine what I would be doing if I did not work in this factory. Perhaps I would be in the village doing small jobs on the farm,” she says. “I would just about make ends meet.”

Detroit of Asia

Nissan and Renault are two of several international carmakers that have set up shop outside Chennai in the last 10 years.

Nearly a fifth of all cars made in India are produced in the area around Chennai in Tamil Nadu state

Today the area, known as the “Detroit of Asia”, is a thriving manufacturing hub where cars are produced for export as well as for the domestic market.India makes about 24 million vehicles a year, nearly a fifth of them in this region of Tamil Nadu state.

“We have seen a number of other car manufacturers establish plants in the state and that has helped us attract and help local suppliers relocate and set up in Tamil Nadu itself,” says Colin Macdonald, managing director of Renault-Nissan.

“Since 2010, we had about 15% of our suppliers in the Tamil Nadu area. We are now operating with 60% of our Indian suppliers in Tamil Nadu. So from an employment perspective, this is huge.

“High unemployment

Creating jobs is central to Prime Minister Narendra Modi‘s Make in India campaign, an effort to promote inclusive growth in the country.Modi has promised foreign players he will make it easier to do business in India.

But more than two years after taking power, and after introducing a raft of policies, unemployment rates are at a five-year high.According to a recent government survey, about 77% of Indian households have no regular wage or salaried person, and so for many, life is not improving fast enough.

Domestic market growth

Despite that, success in places like Chennai is a sign that India remains appealing to foreign companies.Now that the area has become an auto hub, cost-effective raw materials can be sourced. With the port less than 100km away, it is easy to import parts and export products back out. Labour is cheap too.

Several car companies have set up shop on the outskirts of Chennai. Workers here are seen at Ford’s plant in Chengalpattu

The growth of the domestic market only adds to India’s appeal.”Today, only 20 in 1,000 people in India own a vehicle but we expect that to grow dramatically in the next five years and we expect the market to be five million cars by 2020, making India the third biggest market on the planet,” says Colin Macdonald.

A matter of pride

For Sujitha Rajendrababu, owning a car one day has become more of a reality than a dream.

“What I had dreamed of becoming in the future was made true by this job. I do not know how to express this.”

The daughter of a farmer, she has already used the money she has earned to buy a fridge, a TV, some jewellery and even a holiday around India. But her ambitions don’t stop there.

“My long-term goal is to become the manager of the stamping shop. I don’t only want to be the manager of the stamping shop, but of this organisation as well.”

And she wants the same for other people just like her.

“A lot of people in my village ask me if I can help them find jobs for their children. That makes me feel proud.”

Source: Transforming lives in India’s manufacturing hubs – BBC News

03/10/2016

Amitabh Bachchan: ‘If she gets paid more than me, that’s fine’ – BBC News

One of India’s biggest stars, Amitabh Bachchan, says he’s glad people are talking about the gender pay gap.

He recently starred in a film called Pink about feminism and attitudes towards women in India which has caused quite a stir in the country.

He spoke to the BBC’s Yogita Limaye.

Source: Amitabh Bachchan: ‘If she gets paid more than me, that’s fine’ – BBC News

03/10/2016

How Google’s Bicycle-Riding Internet Tutors Are Getting Rural Indian Women Online – India Real Time – WSJ

The internet fails to reach millions of women in the small towns and villages of India, so Google is trying to deliver it to them — by bicycle.

The Alphabet Inc. unit has built an army of thousands of female trainers and sent them to the far corners of the Subcontinent on two-wheelers, hoping to give rural woman their first taste of the web. Each bike has a box full of connected smartphones and tablets for women to try and train on.

The idea is to give people who have never even sent an email a better understanding of how being connected could improve their lives. Families that can afford to be online often chose not to be because they do not see the value. Meanwhile women are sometimes blocked by their families from new technology.

ENLARGEA web trainer who is taking part in Internet Saathi, the joint program of Alphabet, Inc.‘s Google and local philanthropy Tata Trusts, in the village of Habibwala, in Rajastan, India, Sept. 28, 2016. PHOTO: GOOGLE

Bhagwati Kumari Mahawar got her very first taste of the internet just a month ago.

The 19-year-old used a smartphone Google brought to her remote village in the desert state of Rajasthan to search for designs of mehndi, the elaborate henna designs Indian women get on their hands and feet. Then she looked up information on how to sew a blouse.

ENLARGEBhagwati Kumari Mahawar in the village of Habibwala, in Rajastan, India, Sept. 28, 2016. PHOTO: GOOGLE

“I really wanted to learn,” she said, sitting in the shade near the Google bicycle and a water buffalo.In the project, called Internet Saathi, Google partnered with local philanthropy Tata Trusts to show women in rural India how to connect to the web.

Instructors are trained in how the web works, and then are given bicycles with large boxes on the back containing internet-enabled devices running Google’s Android mobile operating system. The newly equipped “saathis” — or “partners” in Hindi — then cycle from village to village providing instruction to their peers.

“I wasn’t sure if I could do it or not,” said the instructor who helped Ms. Mahwar get online, 30-year-old Kamla Devi Mahawar, who is unrelated to her pupil.

She never used the web until she began her Saathi training ten months earlier, but since then has enjoyed showing women how to search for information like recipes and stitching guides, and showing them how to use voice queries if they are unable to type in text.

ENLARGEWomen look at cell phones as part of Internet Saathi, the joint program of Alphabet, Inc.’s Google and local philanthropy Tata Trusts, in the village of Habibwala, in Rajastan, India, Sept. 28, 2016. PHOTO: NEWLEY PURNELL/THE WALL STREET JOURNAL

In a demonstration, she sat on the ground while half a dozen women circled around her, watching as she searched for images of nearby temples and forts. Some women want to learn how to use Facebook Inc.’s WhatsApp messaging service, while others simply want to make phone calls, she said.

Since the program’s launch last year, about 9,000 guides have helped reached 1 million women, Google said, noting that the program fits its mission of helping expand internet access globally.

India is an increasingly important commercial market for the Mountain View, Calif. search titan given its nascent internet economy.

While the country is home to more than 1.2 billion people, consultancy McKinsey & Co. reckons some one billion people still lack regular web access. More online consumers in the years ahead could mean more users of Google’s services, like its search engine, email and Android.

A bike used by an instructor who teaches women how to use the web, part of Internet Saathi, the joint program of Alphabet, Inc.’s Google and local philanthropy Tata Trusts, in the village of Habibwala, in Rajastan, India, Sept. 28, 2016. PHOTO: GOOGLE

Last week, at an event in New Delhi, Google executives said they are expanding their efforts to reach Indians with products and features like a new version of its YouTube app designed to work even on India’s often sluggish mobile networks.

Asked how her work with others could be made easier, Ms. Mahwar, the trainer, was quick to point out that better web connectivity is key.

“The internet doesn’t work half the time,” she said. Fixing that “would help a lot.”

Source: How Google’s Bicycle-Riding Internet Tutors Are Getting Rural Indian Women Online – India Real Time – WSJ

03/10/2016

India tax amnesty draws $9.8bn in asset declarations — FT.com

Modi government claims progress in fulfilling election vow to crack down on ‘black money’

A four-month amnesty for tax evaders in India has resulted in the declaration of hidden assets worth nearly $10bn, the government has said, as it seeks to fulfil an election pledge to crack down on illicit “black money”.

The Income Declaration Scheme, which ran from June through September, allowed citizens to report assets previously undeclared to the tax authorities, without risk of prosecution. A charge of 45 per cent was to be levied on the assets declared under the scheme — one of the most conspicuous initiatives in Prime Minister Narendra Modi’s drive to tackle widespread corruption that is seen as a significant drag on the economy.

Arun Jaitley, finance minister, told reporters at the weekend that assets worth Rs652.5bn ($9.8bn) had been declared under the scheme, implying a boost to government revenue of Rs294bn. The amnesty attracted 64,275 declarations, with the average amount declared standing at Rs10.2m. Mr Jaitley cited this to rebut prior fears that the initiative might not elicit a response from wealthy Indians.

New Delhi had not publicly stated a revenue target, but some media reports had said officials were aiming to uncover about Rs1tn in previously undeclared assets.

The initiative followed a similar one launched in 1997 that yielded revenue of Rs97.6bn, but Mr Jaitley said that the latest drive was firmer in its treatment of evaders, arguing that the previous effort had allowed them to make payments based on unduly low valuations of their assets.$9.8bnA

mount of assets declared under India’s four-month tax amnesty

Only about 4 per cent of Indian adults pay income tax, according to the government’s latest economic survey. While the annual income of most Indians is below the Rs250,000 threshold beyond which income tax is due, the slender income tax base also reflects the extent of economic activity that occurs through informal transactions beyond the oversight of tax officials. Such activity amounts to about 20 per cent of gross domestic product, according to a recent report by analysts at Ambit Institutional Equities. That report argued that heightened official scrutiny of domestic transactions had encouraged tax evaders to keep money in cash, hitting demand for formal banking services as well as for property and gold — asset classes commonly used to launder money. Liases Foras, a property research company, estimated in 2014 that 30 to 40 per cent of Indian real estate transactions involved an illicit cash payment.

Firm progress in reducing tax evasion would boost the credibility of Mr Modi’s government, which made this a key part of its 2014 election manifesto. $343bnEstimated amount of assets Indians sent abroad illicitly between 2002 and 2011Central to the drive has been the pursuit of funds concealed in offshore accounts, of which Mr Modi pledged before his election “to bring back every rupee … and use it for the welfare of the poor”.

The US-based group Global Financial Integrity has estimated that Indians sent $343bn of assets abroad illicitly between 2002 and 2011.Last year India’s parliament passed a law imposing criminal penalties for the illicit concealment of overseas assets. This year the government scrapped a treaty with Mauritius under which investments from the island state were exempted from capital gains tax: an arrangement that had been criticised for allowing wealthy Indians to “round-trip” illicit funds back into the country.

Source: India tax amnesty draws $9.8bn in asset declarations — FT.com

03/10/2016

India joins Paris Climate Change Agreement, submits instrument of ratification at UN headquarters – Times of India

With the US, China and now India signing the accord, other nations should not hesitate to join them. On any case, thes three account for the vast majority of the pollution, so even if no one else signs up, its good news for Mother Gaia.

India formally joined the Paris Climate Change Agreement by submitting its instrument of ratification+ at UN headquarters in New York on Sunday – the birth anniversary of Mahatma Gandhi.

The instrument of ratification was deposited by India’s permanent representative to the UN, Syed Akbaruddin.

By putting Gandhi seal on the climate deal, the country will now urge the global community to adopt ‘Gandhian way of life’ (shun extravagant lifestyles) to reduce their carbon footprints and protect the earth from adverse impact of climate change.

India will articulate its point vigorously during the next climate conference (COP22) at Marrakech in Morocco, beginning November 7.

“India had led from front to ensure the inclusion of climate justice and sustainable lifestyles in the Paris Agreement+ . We will put across this view based on Gandhian lifestyle in Morocco”, said environment minister Anil Madhav Dave.

Spelling out next course of action after India formally joined the Agreement, Dave said, “It is important that apart from emission cuts, we also focus on measures that involve broader participation. People in developed countries live extravagant lifestyles with high carbon footprint.

“Simple everyday changes in lifestyles, when practiced by a large number of people around the globe, collectively will make a huge impact”.

Source: India joins Paris Climate Change Agreement, submits instrument of ratification at UN headquarters – Times of India

03/10/2016

China’s Yuan Just Joined An Elite Club Of IMF Reserve Currencies

China’s yuan joins the International Monetary Fund’s basket of reserve currencies on Saturday in a milestone for the government’s campaign for recognition as a global economic power.

The yuan joins the U.S. dollar, the euro, the yen and British pound in the IMF’s special drawing rights (SDR) basket, which determines currencies that countries can receive as part of IMF loans. It marks the first time a new currency has been added since the euro was launched in 1999.The IMF is adding the yuan, also known as the renminbi, or “people’s money”, on the same day that the Communist Party celebrates the founding of the People’s Republic of China in 1949.

“The inclusion into the SDR is a milestone in the internationalization of the renminbi, and is an affirmation of the success of China’s economic development and results of the reform and opening up of the financial sector,” the People’s Bank of China said in a statement.

China will use this opportunity to further deepen economic reforms and open up the sector to promote global growth, the central bank added.

The IMF announced last year that it would add the yuan to the basket, so actual inclusion is not expected to impact financial markets. But it puts Beijing’s often opaque economic and foreign exchange policy in the international spotlight as some central banks add yuan assets to their official reserves.

Critics argue that the move is largely symbolic and the yuan does not fully meet IMF reserve currency criteria of being freely usable, or widely used to settle trade or widely traded in financial markets. U.S. Republican presidential nominee Donald Trump has said he will formally label China a currency manipulator if he wins November’s election.

China stunned investors by devaluing the currency last year and the yuan has since weakened to near six-year lows, adding to worries about already feeble global growth.

Some China watchers also fear that Beijing’s commitment to further market opening and financial sector reforms will fade after its diplomatic success, despite repeated reassurances from Beijing it will continue with the process.

U.S. Treasury Secretary Jack Lew said on Thursday the yuan was “quite a ways” from true global reserve currency status. The new IMF status recognizes the “enormous” change in China in the last 10 years that had made the yuan more open, but Beijing still had work to do to make its currency and its economy more market-driven, he said. “Being part of the SDR basket at the IMF is quite a ways away from being a global reserve currency,” he said.

Capital Economics said inclusion of the currency in the IMF’s SDR basket will have minimal impact on foreign demand for yuan assets, so “offers little support” for the currency.“

If anything, the risk is that official intervention to keep the renminbi stable ahead of its inclusion will subsequently be paired back, allowing for renewed deprecation,” it said in a research note.

The IMF on Friday fixed the relative amounts of the five currencies in the basket for five years, based on their average exchange rates over the past three months.

Source: China’s Yuan Just Joined An Elite Club Of IMF Reserve Currencies

03/10/2016

How has India changed a year after Dadri beef lynching? – BBC News

It has been a year since a Muslim man in northern India was lynched over rumours that his family had slaughtered a cow and eaten beef.

Hindus consider cows to be sacred, and for many, eating beef is taboo. The slaughter of cows is also banned in many Indian states.But Mohammad Akhlaq’s death sparked widespread outrage and contributed to changing the social and political discourse of the country. The BBC’s Ayeshea Perera looks at some of the most significant things that happened in India following his death.

The ‘intolerance’ furore

Image copyright AFP: The government began to be haunted by allegations of intolerance

Perhaps the largest fallout of Mohammad Akhlaq’s death in Uttar Pradesh state was the accusation of “intolerance” that began to haunt Prime Minister Narendra Modi’s ruling Hindu nationalist BJP.

Critics of the BJP have often accused it of being Hindu majoritarian in its outlook and of being hostile to ethnic and religious minorities, particularly Muslims. And this incident only strengthened those voices.

The fact that Mr Modi did not immediately condemn the incident, choosing to remain silent even as state party leaders jumped to the defence of the accused, caused even more anger.

It prompted an unprecedented movement by writers and poets who had been celebrated by the government – they started returning their prestigious Sahitya Akademi awards to protest at intolerance in India. More than 40 writers from all across the country returned their awards and were soon joined by a group of film makers who said they would not be “guilty of flattening diversity” in the country.

Leading writer Nayantara Sehgal, a niece of India’s first prime minister Jawaharlal Nehru, wrote that “… India’s culture of diversity and debate is now under vicious assault… The prime minister remains silent about this reign of terror. We must assume he dare not alienate evil-doers who support his ideology.

“But “intolerance” was not limited to returning awards – it found its way into popular discourse as well. Bollywood superstar Amir Khan also created a furore when he expressed concern over the “growing intolerance” in India. He was later joined by fellow star Shah Rukh Khan who said he “respected” people returning awards to protest against intolerance.

Later, the arrest of a student leader from India’s prestigious Jawarhalal Nehru University on sedition charges over a rally condemning the hanging of a man convicted of attacking the Indian parliament also sparked cries of “intolerance” on a massive scale.

The BJP loses Bihar

Image copyright AP: Nitish Kumar led an alliance which defeated PM Narendra Modi’s BJP in the Bihar polls

A second outcome that can be linked back to the Dadri killing is that the BJP went on to lose state elections in the neighbouring northern state of Bihar – a poll it was widely expected to win.Incumbent chief minister Nitish Kumar, who was on his second term, had already suffered a crushing defeat to Mr Modi’s party in the 2014 parliamentary elections, and another “Modi wave” was expected to sweep the state elections as well.

But in a masterstroke, Mr Kumar and his allies positioned themselves as a “secular” alliance, in direct opposition to the “communal” BJP.

The fact that Mr Modi and BJP party chief Amit Shah raised the sensitive issue of cow slaughter and consumption of beef during election rallies in the state also did not seem to help.

When Mr Kumar’s party won, it was called a “historic verdict” and hailed as proof that running a poll campaign along religious and ethnic lines would not bring results.

The rise of cow protection vigilante groups

Image copyright MANSI THAPLIYAL: These self styled cow protectors created headlines after they lay in wait for and then badly beat up a number of truck drivers transporting cattle for slaughter

The death of Mr Akhlaq seemed to put new focus on “cow protection” groups who took it upon themselves to ensure that cattle would not be slaughtered or consumed.

Mostly members of militant Hindu groups like the Bajrang Dal, Vishwa Hindu Parishad (World Hindu Council) and Shiv Sena, these self-styled cow protectors created headlines after they lay in wait for and then beat up a number of truck drivers transporting cattle for slaughter.

In another attack, two Muslim woman were beaten up after they were accused of carrying beef. And most significantly, in an incident which led to massive caste unrest, four low-caste Dalit men trying to skin a dead cow were thrashed by vigilantes in the western state of Gujarat.A video of the incident went viral and led to huge protests and an uproar in parliament.

After again being accused of silence, Mr Modi used a radio address almost a full month later to criticise vigilante attacks, saying such people made him “angry”, and any attacks must be investigated.

Eating as an act of defiance

Beef fry is an essential part of the diet in south India’s Kerala stateThe right to eat beef became another huge talking point in

Source: How has India changed a year after Dadri beef lynching? – BBC News

03/10/2016

Furniture Retailing With Chinese Characteristics – China Real Time Report – WSJ

At the opening of Zaozuo’s first furniture store this month in Beijing, a shopper snoozed on a couch while others clambered onto wall-mounted shelves to take selfies perched in chairs.

Welcome to furniture retailing with Chinese characteristics.Online furniture startup Zaozuo Zaohua Zworks Ltd. opened the outlet in an upscale mall after hitting resistance from customers wary of buying bulky items without so much as a feel of the fabric, let alone a bit of shuteye.

Liu Yusi, a 33-year old human-resource executive living in Beijing, said the showroom is a good idea given that buying large pieces of furniture without a test drive can be a leap of faith, although she was a little disappointed there weren’t any beds on display. “Maybe the store is too small,” Ms. Liu said. “But I think a mattress is something you really need to lay on before you decide to buy.”

Zaozuo has tried to distinguish itself from competitors by letting customers vote on the design and style of furniture items at the prototype stage before they’re mass produced, a strategy it says reduces inventory and cuts cost. This is a Chinese adaptation of business models used by the likes of U.S. website Threadless.com — which conducts online polls of crowd-sourced T-shirt designs before producing winning entries – and by crowd-funding sites that have investors vote on ventures they’re willing to fund.

Zaozuo’s customers vote for the designs they’d like to buy. PHOTO: ZAOZUO, DON ARBOUR/THE WALL STREET JOURNAL

The approach has its skeptics. Guangdong Weiyuhua Furniture Co. says it thinks Zaozuo’s voting is a gimmick and questions whether selling furniture online is sustainable. “It targets a few rich people in cities like Beijing or Shanghai,” said company sales manager Li Songzhi. “Traditional furniture companies like ours have real stores all over China.”

With nearly 700 million online users, Chinese consumers are driving explosive growth in the e-commerce sector, undercutting traditional retailers and leaving new online ventures fighting for an edge. Zaozuo co-founders, Stanford business school graduates Shu Wei and Guan Zishan, say China’s struggling manufacturing sector needs a wakeup call as it battles rising debt and excess capacity.“

The old system is not working very well,” said Ms. Shu. “That was the starting point of our business model.”

One potential problem with the company’s voting system is possible voter fraud, says Travis Wu, China research director with consultancy Forrester Research Inc. “In China, everything is a bit tricky, and lots of people try to game the system,” Mr. Wu said. That could see designers tilt results toward their own models, for example, or allow competitors to steer Zaozuo into producing money-losing items, he said.

Another concern: with Zaozuo opening a showroom, it risks driving up costs and undercutting its advantage over traditional furniture makers. Mr. Guan says users must be registered before voting, the company watches carefully for unusual online activity and the new store is not a major investment.

Zaozuo, which attracted several thousand curious shoppers to its store launch on a recent weekend, sees itself inhabiting a competitive space between expensive designer brands and mass marketers like Sweden’s IKEA, a company that attracts its share of showroom lounge lizards. On any given weekend, entire families can be found snoozing on beds in Ikea’s massive showrooms, luxuriating in the air conditioning and enjoying the inexpensive food.

China’s fragmented furniture industry with around 5,000 large companies and combined revenue of 244.5 billion yuan [$37.3 billion] in 2015, up 16.1% increase from the previous year, is tradition-bound and due for a shakeup, say online companies. Internet furniture companies only command a tiny slice of the market but are growing rapidly. Privately held Zaozuo said sales are increasing by 40% annually although it has yet to break even. MZGF Furniture Studio Co., another online firm, said sales have been expanding by as much as 200% year on year in some months.

Zaozuo, which works with 50 Chinese factories and more than 80 European designers, has attracted $17.5 million in venture funding and hopes to eventually go public. Anna Fang, chief executive of venture capital group Zhen Fund, which has invested $1.3 million in Zaozuo, said prospects for the industry are promising but the startup may need to shorten delivery times, which range from three to 35 days. “Ikea can get furniture to you right away,” she added.At its store opening, Zaozuo said it tried to discourage shoppers from getting too comfortable on its furniture. “The customer might be comfortable, but the image is not that good for other customers who can’t feel the fabrics if someone’s sleeping on it,” said Mr. Guan. “Maybe they do it because they’re tired. Shopping can be very tiring.”

Source: Furniture Retailing With Chinese Characteristics – China Real Time Report – WSJ

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