Chindia Alert: You’ll be Living in their World Very Soon
aims to alert you to the threats and opportunities that China and India present. China and India require serious attention; case of ‘hidden dragon and crouching tiger’.
Without this attention, governments, businesses and, indeed, individuals may find themselves at a great disadvantage sooner rather than later.
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There are about 200 places on offer each year – but such is the appetite for families to get a better life for their children, there are 250,000 applications.
The school, set up by the Shiv Nadar Foundation, is completely free, and offers the type of education usually available only to the very wealthy.
Roshni Nadar Malhotra, a businesswoman and trustee of the foundation, says the school has been modelled on India’s private schools, which put students on the pathway to top universities and high-flying careers.
Roshni Nadar Malhotra wants the school to produce a more meritocratic generation of leaders for India
But the VidyaGyan school is open only to the very clever and very poor – which she describes as the “top of the bottom of the pyramid”.
No-one can even apply u
Unless their family income is below the equivalent of £1,500 per year, and the school carries out checks to make sure that better-off families are not trying to get in.
“Most of India is rural, there is a huge population in India not being tapped for their excellence. They have no access to great universities,” says Ms Malhotra, who is chief executive officer of the HCL technology company.
A performer from Uttar Pradesh prepares to take part in a festival
“We wanted to see if we could have an admissions system that was truly meritorious.”
The admissions system operates on an epic scale.
After the initial 250,000 applications, Ms Malhotra says, about 125,000 turn up to take a written test.
The drop-out rate is a reflection of the tough lives of these families, who might struggle to travel to a local test centre or be stopped by bad weather.
The school’s ambition is for its students to compete anywhere in the world
Based on the results, there is a shortlist of about 6,000 students, who then take another set of tests. There are also visits to the homes of applicants.
This sifting process produces an intake of 200 pupils, boys and girls, who are taught, clothed, fed and housed by the school.
These children from the poorest rural families, a deliberate mix of religions and castes, then receive a high-cost education, exposing them to ideas and opportunities.
It is an intensive process, designed to create a “stepping stone” to top universities in India or abroad.
The school has been founded to help clever poor pupils from Uttar Pradesh
It has become such a phenomenon that there are now coaching academies dedicated to training people for the test.
So far the school has cost the foundation £59m – and Ms Malhotra says there have been questions about whether the money would have been better spent on teaching basic literacy to much bigger numbers of young people.The final intake of 200 pupils stands compared with Uttar Pradesh’s population of about 200 million.
But Ms Malhotra says the distinct purpose of the school is to create a leadership academy focusing on providing a chance for disadvantaged youngsters to compete with India’s elite.
These are the children of poor, uneducated farmers, and she wants them to be equipped to reach the top in politics, business or sport.
The school is intended to provide a stepping stone to top universities
And she says there is a “ripple effect” on the home villages of these pupils, as they see their young people being able to go to a top university in India or in Europe or the United States.
“When students get into a great university, it’s a huge aspirational lift for their village. These students become beacons of hope.”
There are also expectations of paying back to their local communities. In the summer, when they go home, they have to carry out a socially useful project, such as providing cleaner water, clearing away rubbish or finding a safer way of cooking.
“It’s about getting their hands dirty and finding out how to solve problems,” says Ms Malhotra.
Once pupils are accepted, everything in the school is free for families
The school’s first graduates have left with “stellar results”, but she also wants them to be equipped to compete with international students anywhere.
“It’s not just about getting in, they need to be able to survive. All of a sudden you’re thrown in with other highly competitive students from all over the world.”
It will be some time before it is possible to see if they become India’s future leaders, she says. “But they’re on their way.”
Property magnate Wang Jianlin of Dalian Wanda tops the list of 594 billionaires in the country, ahead of 535 billionaires in the US.
Alibaba‘s Jack Ma was second, with his wealth having risen 41% from last year.
The annual list is compiled by Shanghai publishers Hurun and often compared to the Forbes list in the US.The Hurun Report’s rich list is one of the most closely-watched and accurate assessments of wealth in China. The annual report has been published for the past 18 years.
Earlier this year, the publisher released a separate, global list, showing that the number of billionaires in China outnumbered those in the US for the first time.
However, none of China’s super-rich make it into the global top 20.
Global reach
At the top of the China rich list is Wang Jianlin, who sits on a personal fortune of $32.1bn (£26.4bn).
His company Dalian Wanda has made headlines throughout the year with a number of high profile forays into the US movie markets. It has taken over Legendary Pictures, as well as stepping into US and UK cinema chains and striking an alliance with Sony Pictures.
Alibaba’s Jack Ma is a close second with $30.6bn, and Pony Ma of internet and online gaming giant Tencent comes third with $24.6bn.
Image copyright REUTERS
The biggest increase came from Yao Zhengua of investment and real estate firm Baoneng Group, whose wealth jumped by 820% to $17.2bn, putting him in fourth position.
Hurun chairman Rupert Hoogewerf said Mr Yao’s rise illustrated a shift in China’s maturing economy.
“Yao’s financial investment model represents the new wave of wealth creation in China,” he explained. “The first money made in China 20 years ago came from trading, followed by manufacturing, real estate, IT, and today it is about using the capital markets for financial investments.
“Robin Li and Melissa Ma of search engine Baidu have a fortune of $14.7bn, ranked eighth while founder of smartphone makers Xiaomi, Lei Jun, dropped out of the top 10 to number 14 as competition in China’s smartphone market intensified.
Most of China’s billionaires live in Beijing, followed by Shenzhen, Shanghai and Hangzhou.
Globally, the Forbes rich list is topped by Microsoft founder Bill Gates with $75bn, followed by Amancio Ortega of Zara and legendary investor Warren Buffett.
Malik Abdullah’s plastic recycling business in Dharavi, the sprawling slum in Mumbai that is among the largest in Asia, has survived fire, building collapses, and the criminal underworld for decades. Now, it is threatened by development.
For 35 years, Abdullah has carried on the business built by his father, pulverising used plastic cans and bottles into pellets, then selling them to factories to refashion.
Thousands of small businesses like his thrive in Dharavi, creating an informal economy with an annual turnover of $1 billion by some estimates.
Now, plans to replace the ramshackle workshops and decrepit homes with office blocks and high-rise apartments threaten the businesses that employ thousands of its 1 million residents.
“The city doesn’t care about the businesses here, which are our livelihood,” said Abdullah, 52, standing in an alley crammed with towering stacks of plastic containers.
“This is where we live, this is where we work. Where will we go if they only build flats and offices?” he said.
During the past two decades, there have been several attempts to develop Dharavi, which sprawls over 240 hectares (590 acres). However, residents have opposed many of them, saying they do not consider their interests.
Real estate in Mumbai, India‘s financial hub, is among the most expensive in the world. The contrast between rich and poor is stark, and about 60 percent of the city’s population of more than 18 million lives in slums.
Dharavi has always been a magnet for migrants from across India. Many have lived there for decades, their one-room tenements and low-rise homes dwarfed by the gleaming glass and chrome office towers and luxury hotels that dot the city.
Amid Dharavi’s narrow alleys, open drains and canopies of electric cables, migrants who came in search of better economic opportunities have created a community of schools, temples, mosques, restaurants, tailors and mobile phone shops.
Tens of thousands work as potters, leather tanners, weavers, soap makers, and in Dharavi’s massive recycling industry.
Most homes double up as work spaces, the whirr of sewing machines, the clang of metal and the pungent odour of spices mingling with the call for prayer and the putrid smell of trash.
“People think of slums as places of static despair as depicted in films such as ‘Slumdog Millionaire‘,” said Sanjeev Sanyal, an economist and writer, referring to the Academy Award-winning movie that exposed the gritty underbelly of Dharavi.
“If one looks past the open drains and plastic sheets, one will see that slums are ecosystems buzzing with activity… Creating neat low-income housing estates will not work unless they allow for many of the messy economic and social activities that thrive in slums,” he said.
ROOF TOPS
Once a small fishing village, Dharavi was notorious as a den of crime in the 1970s and ’80s. Following a massive crackdown, violent crime is rare and Dharavi has featured in movies, art projects and a Harvard Business School case study.
Fed by two suburban railway lines and perilously close to the Mumbai airport, Dharavi has lured developers, too.
Recent plans by city officials envisaged private developers clearing the area and building high-rise flats in which each eligible family gets a free 225 sq ft (21 sq metres) unit. The developer in turn gets rights to build commercial space to rent.
Dozens of such housing blocks have been built over the years, falling into disrepair as facilities were not upgraded.
What these buildings also lack is room for work. The squat tenements are perfectly suited for businesses, with living and sleeping spaces sitting atop work spaces, workers spilling into the alleys, and material stacked outside and on roof tops.
In Kumbharwada, the potter’s colony, where migrants from neighbouring Gujarat state make earthen water pots and lamps, potters’ wheels can be seen through open doorways, while ready pots are stacked in the alleys awaiting pickup.
The colony is abuzz ahead of the Dussehra and Diwali festivals, when decorated pots and lamps are in demand.
With small televisions turned on low, women sit cross-legged on the floor in their homes, painting motifs in red, yellow and green, and gluing on sequins and shiny bits of mica.
Down another alley, a group of women chat and braid leather strips for belts and bags on the stoop of a home.
“We want new flats, but they are small,” said Sharada Tape, who earns about 100 rupees ($1.50) a day.
“There are no spaces like this where we can all sit and work. It will be difficult, but we need the money,” she said.
RESIDENTS WANT MORE SAY
City officials last month submitted a new 250 billion rupee ($3.7 billion) redevelopment plan to Maharashtra state for approval after previous plans failed to attract bidders.
The new plan, a public-private partnership, has ample commercial space for businesses, but only for the “formal, legitimate” ones, said Debashish Chakrabarty, head of the Dharavi Redevelopment Authority.
“All the licensed businesses will have space under the plan. It will be better, cleaner than what they have now,” he said.
“Those that are engaged in informal businesses have the option of applying for commercial licences, then they can also get a space. If they don’t, then we can’t help them,” he said.
It is this narrow definition of what’s legal and permissible that is the biggest challenge, not just to recognising Dharavi’s businesses, but also determining Dharavi’s fate, said Rahul Srivastava, a founder of the Institute of Urbanology in Mumbai.
“The biggest impediment to the improvement of many of these settlements is the misconception that they are illegitimate, because residents don’t own the land they occupy,” he said.
“Can settlements which are home to fifth-generation migrants be called ‘informal’? We need to transform our perception of these neighbourhoods,” he said.
Across the country, plans to build modern Smart Cities will force tens of thousands of people from their slum homes as planners spruce up central business districts and build metro train lines, activists say.
Campaigners say until authorities give Dharavi residents more power and recognise the vital role of their businesses, any redevelopment plan is destined to fail.
“If we don’t have these small enterprises, it wouldn’t be Dharavi,” said Jockin Arputham, president of the National Slum Dwellers’ Federation in Mumbai.
“This is a people-sponsored economic zone, and the redevelopment should be around the economic zone. It is a township, not a slum, and it should be treated as one,” he said.
Abdullah, the plastic recycler, is reconciled to his fate.
“We want development. We also want to keep our businesses,” he said.
“But we have to be prepared for any eventuality. We are not owners of the land, so we may have to shut down,” he said.
India’s global army of expatriates–which does everything from writing software in Silicon Valley to building skyscrapers in in Qatar–is the world’s most generous when it comes to number of dollars sent home, but this year they have become a bit stingy.
Recently released World Bank estimates predict the Desi diaspora will send home $65.45 billion this year. While that is just above remittances into China ($65.17 billion) and tens of billions beyond any other country, it is a 5% decline from last year.
The last time India saw a bigger slide in remittances was back in 2004 when remittances fell 11%.
Globally, remittances are expected to edge up about 1% this year, the World Bank predicted, so why is India underperforming?
The main problem is that many of the Gulf Cooperation Council countries have been struggling with the decline in oil prices. That has meant they are hiring fewer Indians, providing fewer perks to their international employees and in some countries even restricting the number of foreigners that can be hired.
“This year the South Asia region would see a decline of 2.3% in remittances to the region due mainly to the impact of declining oil prices and labor market nationalization policies on remittances from GCC countries,” the report said. “Moving forward remittance growth in the region is expected to remain subdued.”
Some parts of the southern state of Kerala and other regions in India that depend on remittances are already starting to feel the pain from the decline in oil riches.
The World Bank expects remittance growth to return, expanding 2.2% in South Asia next year and 2.3% the year after that. Globally remittance growth will likely be stuck below 4% for years, the bank said.
“Remittances continue to be an important component of the global economy, surpassing international aid. However this ‘new normal’ of weak growth in remittances could present challenges for millions of families that rely heavily on these flows. This, in turn, can seriously impact the economies of many countries around the world bringing on a new set of challenges to economic growth,” said Augusto Lopez-Claros, Director of the World Bank’s Global Indicators Group.
A fatal building collapse in southern China has highlighted a practice that more than once has produced death traps: structures built with little oversight by villagers on former farmland.
Such slapped-together buildings have tended to grow even more precarious as they age and as extra floors are added.
Four six-story buildings in a suburban area of Wenzhou, a city on China’s southern coast, collapsed Monday morning, claiming at least 22 lives, according to the state-run Xinhua News Agency, which cited local authorities. Six survivors were pulled from the building before the rescue was called off, Xinhua said.
The buildings were close to industrial parks of Wenzhou, a hub for light manufacturing including shoemaking, and most residents were migrant workers.The buildings were several decades old and erected by villagers, according to an article by the Wenzhou Daily that the local government reposted on its official website Tuesday. It said investigations were under way but an initial analysis showed that the collapse was likely caused by the buildings’ low quality and shaky foundation, a problem made worse by continuous rainfall in the past few days.
It used to be common practice in the 1980s and 1990s for residents outside China’s urban area to build houses with their own hands, often on what had been farmland. Over the years, floors were added without approval, leaving tottering buildings crumbling under the extra weight.
As cities have grown to incorporate such areas, local governments have tried to get rid of these “towns within cities,” tearing down the aging and shoddily built structures. The Wenzhou government had targeted much of the complex of the recent collapse for demolition, some of which had already started.
It wasn’t the first collapse of villager-built housing. Two years ago, a building under construction by local farmers in Xian in western China collapsed, killing five people.
Some online commenters pointed out that photos of the buildings involved show that more floors had been added to the original construction. The state-run newspaper Beijing News quoted a Wenzhou resident as saying that it was common for self-built buildings in the area to have additional floors.
The practice of adding floors has sometimes been a way for the owners of buildings targeted for demolition to extract more compensation from the government, which bases amounts to pay out to residents on the size of the living areas.
Another building collapse in Xian in 2011, which claimed seven lives, was caused by illegal additions the building’s owner had made to get more compensation, according to the local government. The owner was detained by the local police.
That tragedy came months after the Xian government rolled out new regulations to forbid compensation for illegal additions to a building. The local government said at the time that more than 50 cases of “self-built” building collapses had caused 69 deaths since 2007.
It was unclear whether the owners of the collapsed buildings in Wenzhou, who weren’t identified by the local government, will be held legally responsible for the casualties.
The Wenzhou collapse prompted calls for more regulation. “If relevant departments are still indifferent in face of self-built houses in such a disastrous state,” read one commentary by Beijing News on Tuesday, “then similar tragedies will be repeated.”
In 2011, we tried our hand at predicting the ways in which, in the decade to come, Chinese consumers would change their preferences and behaviors.
This article takes stock of those predictions.
Why check in now? One reason is we’re about halfway to 2020. Another is a comprehensive new McKinsey survey, which follows nearly ten years of previous research that includes interviews with more than 60,000 people in upward of 60 cities in China. Along the way, we’ve bolstered our own team’s data on consumer preferences and behavior with a number of complementary analyses and models, including McKinsey’s macroeconomic and demographic studies of Chinese urbanization and income development. We’ve also interviewed academics to draw out the major trends shaping the course of the Chinese economy, such as its rapidly aging population, the growing independence of women in society, and the postponement of critical life milestones, such as marrying and having children.
We’ve done it all with the abiding belief that companies getting ahead of the trends can build their brands and offerings to fit a rapidly evolving set of consumer needs in China. Deeper and more nuanced understanding of Chinese consumers can help reveal fresh opportunities—for new entrants and incumbents alike—and signal those areas where established players may need to be more wary.
Looking back nearly five years on, it is plain that Chinese consumers are evolving along many, though not all, of the lines we’d predicted. While geographic differences persist, Chinese consumers are, on the whole, more individualistic, more willing to pay for nonnecessities and discretionary items, more brand loyal, and more willing to trade up to more expensive purchases—even as their hallmark pragmatism endures.
Evolving geographic differences
Much of the research we described five years ago highlighted the vast differences we found among consumers in China’s various cities and regions. Just as it was then, generalizing about Chinese consumers continues to be almost as difficult (and maybe as foolish) as it is to generalize about European consumers.
We predicted these differences would remain—and even grow more significant, especially in the consumption patterns and tastes that relate to discretionary items. To help companies better tailor their go-to-market approach, we grouped most cities in China into clusters based on their similarities, including their geographic proximity and the transportation infrastructure that connects them.
As the economic structure in each of the 22 biggest city clusters has evolved—and as each of them has been affected differently by the recent slowdown of China’s economy—significant differences, for instance, in consumer confidence, do indeed persist between these clusters.
For instance, some 70 percent of consumers in the Fuzhou–Xiamen city cluster, which lies on the coast across from Taiwan, said in our latest report that they are confident their income will significantly increase over the next five years. In that same report, the Byland–Shandong city cluster, which lies on the coast between Beijing and Shanghai, was comparatively pessimistic, with only 33 percent of its consumers expressing such confidence.
Furthermore, when our latest survey compared the consumers in the Shanghai area to those around Beijing and Hangzhou, certain spending attitudes also showed marked differences. For example, brand loyalty increased much faster in Shanghai (24 percent increase in three years versus just 7 percent in Beijing and 9 percent in Hangzhou), as did the willingness to pay for better or healthier products.
Despite geographic differences, there are broad similarities among Chinese consumers. These mirror the general trends economists have found among consumers around the world as economies develop. The general tendency is for consumers, as they earn more, to spend a lower percentage of their income on food, a little more on healthcare, and even more on travel and transportation, as well as on recreational activities. It was no great stretch then, in our report five years ago, to predict a significant shift in consumption from necessities and seminecessities into discretionary categories.
Sure enough, our new survey shows Chinese consumers following the anticipated pattern. When we asked how they plan to increase spending as their income increases, dramatically fewer consumers said they will increase it on food (46 percent in the latest survey, compared to the 76 percent who said they would do so three years earlier).
Responses trended slightly up for healthcare products (from 16 percent to 17 percent), and increased for travel (from 14 percent to 23 percent) and leisure (from 17 percent to 25 percent).
Aspirational trading up
In our previous predictions, we also argued that as the income of Chinese consumers grew, they would aspire to improve their quality of life by not only spending more on discretionary items, but also by shifting their spending to more expensive items in the same categories.
In necessity categories such as food, for example, we predicted consumers would be willing to spend more for healthier versions of the same products—for instance, that olive oil would grow much faster than less healthy (and less expensive) oils. In semi-necessity categories like apparel, we predicted people would buy more special-occasion and premium brands. We anticipated that the strongest beneficiaries of these changes would be in the more discretionary and aspirational categories, such as skincare and automotive. So what has happened so far?
Premium categories have really accelerated. Comparing cosmetics purchases between 2011 and 2015, 44 percent of consumers have traded up their purchases, compared with 4 percent who traded down. Even for rice, 25 percent of consumers traded up versus 3 percent who traded down. Automotive was not included in our survey, but sales data from the Traffic Management Bureau of the Ministry of Public Security in China suggest significant trading up. In 2011, 51 percent of the renminbi spent on cars by Chinese consumers were for autos cheaper than 100,000 RMB. These sales accounted for only 43 percent of the market. Cars selling for 100,000 to 250,000 RMB grew twice as fast with a compound annual growth rate (CAGR) of 19 percent versus 9 percent. And cars with price tags between 250,000 and 400,000 RMB grew the fastest of all, with 23 percent CAGR.
Emerging senior market
In 2011, we observed a big generational difference between consumers in their late 50s and early 60s, who were very conservative spenders, and all of the age cohorts younger than them.
We predicted that by 2020, as the needs of consumers over the age of 55 changed along with their economic confidence, their spending habits would follow suit, making this age group worth pursuing by consumer-product companies. If anything, we underestimated the speed and force with which this trend would unfold.
By 2015, the 55–65 age group had started to shift even faster than the rest of the population. For example, 52 percent of the people in this age group showed a preference for premium products, compared to just 32 percent in 2012. They leaped from being the most conservative age group to the one most likely to trade up. Similarly, the preference for famous brand names among these older buyers jumped by more than 20 percent, fully closing the previous difference among cohorts. As Exhibit 1 shows, these older consumers don’t shy away from indulgences, and they have grown more likely to use the Internet to research their purchases, even if they still do so less often than younger consumers.
Exhibit 1
That said, the upper age group has remained more pragmatic and cost conscious than any other age group, as we discuss in the following section.
The still-pragmatic consumer
Back in 2011, even as we were predicting changes in the behavior and preferences of Chinese consumers, we also saw ways in which their essential pragmatism would likely stay the same. For instance, we anticipated that impulse buying would remain lower than in other countries and that value for money would continue to be an important consideration when choosing products and services. Interestingly, Chinese consumers across all age groups have, in some ways, become even more pragmatic. They’re now even more likely to compare prices across multiple stores, to be more price aware, and to stock up on promotions. That said, they’re now willing to buy more often on impulse (Exhibit 2).
Exhibit 2
The individual consumer
We also predicted that as Chinese consumers aspire to a better life and trade up their purchases, they would become more discerning and gradually more individualistic. This would lead, for example, to a shift toward more healthy choices, more user-friendly products, and products and brands that better fit their personality. This could be a big opportunity for niche brands—and a threat to the mass-market brands that had won big in previous years by using scale and ubiquitous availability, supported by the trust gained by heavy advertising.
Our latest research certainly shows a decrease in consumption in categories deemed less healthy and a willingness to spend significantly more on health and more environmentally conscious categories. It also shows consumers are more likely to spend more to indulge themselves and more likely to try new technology. While their consumption choices have become more individualistic, though, it is important to note that family values continue to be at the top of their priorities (Exhibit 3).
Exhibit 3
One area our predictions missed, however, was by anticipating that consumers, as they became more individualistic in their choices, might focus less on basic product reliability and safety. Perhaps in part because of a number of more recent food scandals, however, consumers seemed more concerned with these issues in 2015 than they were before.
The increasingly loyal consumer
When our team first started researching Chinese consumers, nearly ten years ago, many of us were surprised by their fickle attitude toward brands. Fewer than half of consumers tended to stick with their favorite brands, compared, for example, with almost three quarters of US consumers.
As we debated this tendency while making our predictions, we wondered if, in the clash between pragmatism and individualism, brand loyalty would stay low, increase, or even decline. Ultimately, we decided it would increase as the emotional benefits of brands became more important to consumers and as increased choice and availability of branded products (online and off) would allow consumers to optimize for price and convenience without changing choices too often.
Our recent research confirmed the changes we anticipated. Consumers are now significantly less likely to buy a brand that is not already among their favorites, continuing the upward trend we observed in 2011 (Exhibit 4).
Exhibit 4
The modern shopper
Our 2011 predictions were bullish on e-commerce, predicting that Chinese consumers would adapt their channel choices even faster than has occurred in developed markets.
We estimated that by 2020, online consumer-electronics purchases would jump to 40 percent, from about 10 percent. More mainstream categories would rise to 15 percent, and some categories, such as groceries (now below 1 percent), could reach about 10 percent. These changes are occurring even as the enduring pragmatism and diligence of the Chinese consumer continue to be in place. Our latest research shows that consumers of all age groups are much more likely to collect information online, even on fast-moving consumer goods, than they were just three years ago.
In 2015, online food and beverages sales (excluding fresh) reached 7.2 percent: reaching our predicted 10 percent in five years looks very likely. The online share of consumer-electronic purchases, meanwhile, has reached a whopping 39 percent in 2015, and it now looks possible that by 2020 it will be about 50 percent of overall sales.
Looking from today’s perspective at our 2011 predictions, it is impressive to see the evolution of Chinese consumers—even as their most characteristic traits endure. Certainly, we’ll check in on their progress as we get ever closer to the year 2020. Making predictions may be difficult, especially about the future—as US Baseball Hall of Famer Yogi Berra famously observed. But they can still provide valuable foresight for executives.
Indians are acquiring a strong taste for soybean oil thanks to lower prices, fueling a surge in imports at a helpful time for a global market struggling with a glut of the commodity.
India’s imports of soybean oil have quadrupled in the last five years to more than 4 million metric tons this year, according to data compiled by the country’s vegetable oils industry body. India’s soybean oil imports are expected to rise over the next 10 years by as much as 40%, the U.S. Department of Agriculture estimated in May.
Soybean oil, produced by crushing soybeans, is used in everything from cooking oil to cookies and lipstick.
In India, they are favored for cooking samosas, dosas and curries, but the relatively high price of soy oil was a deterrent for many consumers in the country. India’s gross domestic product per capita grew 6.9% from a year earlier to $6,200 in 2015, but remained much lower than the U.S. with GDP per capita of $55,800, according to U.S. estimates.
India dethroned China two years ago as the world’s largest importer of soy oil. Some Indian consumers who have switched to soy oil cited the steep drop in prices—35% since 2012. Prices of palm oil, its main rival used widely in restaurants and by poorer Indians, have mostly been moving sideways.
“Demand from India will certainly play a role in absorbing excess soy-oil supplies,” said Vamsi Krishna Kona, a trader at Inditrade Derivatives & Commodities.
CHINA’S cities abound with restaurants and food stalls catering to Muslims as well as to the many other Chinese who relish the distinctive cuisines for which the country’s Muslims are renowned.
So popular are kebabs cooked by Muslim Uighurs on the streets of Beijing that the city banned outdoor grills in 2014 in order to reduce smoke, which officials said was exacerbating the capital’s notorious smog (the air today is hardly less noxious).
Often such food is claimed to be qing zhen, meaning “pure and true”, or halal, prepared according to traditional Islamic regulations. But who can tell? Last year angry Muslims besieged a halal bakery in Xining, the capital of Qinghai province, after pork sausages were found in the shop’s delivery van. There have been several scandals in recent years involving rat meat or pork being sold as lamb. These have spread Muslim mistrust of domestically produced halal products.
In response, some local governments have introduced regulations requiring food purporting to be halal to be just that (though not going into detail of what halal means, such as the slaughter of animals with a knife by a Muslim). Earlier this year, however, the national legislature suspended its work on a bill that would apply such stipulations countrywide.
There is much demand for one. Local rules are often poorly enforced. Advocates of a national law say a lack of unified standards is hampering exports to Muslim countries. According to Wang Guoliang of the Islamic Association of China, the country’s halal food industry makes up a negligible 0.1% of the global market.
The government began drafting a national halal law in 2002. But Muslim communities in China have varying definitions of the term. Work on the bill was slow. Each year, during the legislature’s annual session in March, Muslim delegates called for faster progress. But there were opponents, too. Some scholars argued that the government should not regulate on matters relating to religious faith. Others said that by giving in to the Muslims’ demands, China would encourage them to press for more concessions and ultimately form their own enclaves run by sharia.
Such views may have given pause to China’s leaders. In April, at a high-level meeting on religious affairs, President Xi Jinping said religion should be prevented from interfering with the law. That month Wang Zhengwei, a Muslim official who had been pushing for halal legislation, was removed from his post as the head of the State Ethnic Affairs Commission.
Also in April, the Communist Party chief of Ningxia urged officials to “sharpen [their] vigilance” against the use of halal labels on products such as toilet paper, toothpaste and cosmetics. And the government of Qinghai province ordered the inspection of Muslim-only toilets and hospital rooms, as well as shops catering to Muslims, to make sure that halal symbols were being used only on food. Xinjiang, the far-western region that is home to the Uighurs, recently introduced an anti-terrorism law threatening punishment of those who “overextend” halal rules. Officials clearly worry that those who do so might be the same sort of people who embrace jihad.
Ismael An, a Muslim writer, says this is overreacting. “Supporters of the halal law are not the so-called extremists, because real extremists don’t make demands through legislation,” he says. On the internet, however, a small but vocal group of Islamophobes has been calling for a boycott of halal-certified products. They say the price of such goods factors in payments to Islamic groups that grant the certificates—they do not want to give the religion even indirect support. Ironically, it is the non-Muslim love of Muslim food that will ensure the campaign will not succeed.
THE faithful are returning from the haj. Waiting for prayers outside the Great Mosque in Tongxin, a remote town in the western province of Ningxia, Li Yuchuan calls his pilgrimage a liberation: “Our prayers are just homework for it.” His 84-year-old friend (pictured, right) leaps up and twists himself with lithe agility into the shape of a pretzel. “We Muslims pray five times a day,” he says. “We are flexible and tough.” China’s Muslims need to be.
China has a richly deserved reputation for religious intolerance. Buddhists in Tibet, Muslims in the far western region of Xinjiang and Christians in Zhejiang province on the coast have all been harassed or arrested and their places of worship vandalised. In Xinjiang the government seems to equate Islam with terrorism. Women there have been ordered not to wear veils on their faces. Muslims in official positions have been forced to break the Ramadan fast. But there is a remarkable exception to this grim picture of repression: the Hui.
China has two big Muslim groups, the Uighur of Xinjiang and the more obscure Hui. Though drops in the ocean of China’s population, they each have about 10m people, the size of Tunisia. But while the Uighur suffer, the Hui are thriving.
The number of mosques in Ningxia (cradle of the Hui, as one of their number puts it) has more than doubled since 1958, from 1,900 to 4,000, says Ma Ping, a retired professor at Northern Nationalities University. New ones are being built across the province. The Hui are economically successful. They are rarely victims of Islamophobia. Few Muslim minorities anywhere in the world can say as much.
The Hui’s religious practices reflect the waves of Islam that have washed over China. According to Ma Tong, a Hui scholar, just over half of them follow the Hanafi school of Sunni Islam, which was brought to China centuries ago. At the Najiahu mosque south of Yinchuan, Ningxia’s capital, banners adorn the entrance saying “ancient and authentic religion” and “cleave to the original path”. A fifth of the Hui follow the more austere code of Wahhabism brought to China in the 19th century (there are also a handful of more extreme Salafist converts resulting from recent contacts through the haj). And a fifth follow one of three Sufi schools of Islam, an esoteric and mystical branch derided as apostate by hardline Salafists. The Hui’s religious diversity makes it easier for the party to tolerate them. Divide and rule.
But the real secret of the Hui’s success lies in the ways they differ from the Uighur. The Uighur, of Turkic origin, are ethnically distinct. They speak their own language, related to Turkish and Uzbek. They have a homeland: the vast majority live in Xinjiang. A wall of discrimination separates them from the Han Chinese. If they have jobs in state-owned enterprises, they are usually menial.
In contrast, the Hui are counted as an ethnic minority only because it says so on their hukou (household-registration) documents and because centuries ago their ancestors came as missionaries and merchants from Persia, the Mongol courts or South-East Asia. Having intermarried with the Han for generations, they look and speak Chinese. They are scattered throughout China (see map); only one-fifth live in Ningxia.
Unlike the Uighur and Tibetans, they have taken the path of assimilation.
At the new Qiao Nan mosque in Tongxin, the congregation is celebrating the life of an important local figure in the mosque’s history. The ceremony begins with a sermon by the ahong (imam). Then come prayers chanted in Arabic. At the house of the local worthy’s grandson, the worshippers read from the Koran, then visit the tomb. But the afternoon ends very differently, with a reading from an 18-metre-long scroll written by the grandson, Ma Jinlong. This consists of excerpts from eighth-century classical Chinese poetry, illustrated with his own delicate water-colours. Mr Ma is both a stalwart of the mosque and a Chinese gentleman-scholar.
A close connection with Chinese society is characteristic of the Hui. Some of the most famous historical figures were Hui, though few Chinese are aware of it. They include Zheng He, China’s equivalent of Columbus, who commanded voyages of discovery around 1400. Recently, the party chief in Jiangsu province as well as the head of the Ethnic Affairs Commission, a government body, were Hui.
Relations with the Han have not always been good. The so-called Dungan revolt by the Hui in the 1860s and 1870s was a bloodbath. But since the death of Mao in 1976, the two sides have reached an accommodation. Dru Gladney, of Pomona College in California, says a hallmark of the Hui is their skill at negotiating around the grey areas of China’s political system.
Thanks to this, they have been successful economically. They dominate halal food production. They are emerging as the favoured middlemen between state enterprises and firms in Central Asia and the Gulf. China’s largest school of Arabic is a private college, set up and partly financed by Hui, on the outskirts of Yinchuan. Most students are training to be corporate interpreters.
One sign of how far the government tolerates the Hui is that they are even able to practice Islamic (sharia) law to a limited extent. Sharia is not recognised by the Chinese legal code. Yet at the Najiahu mosque, the ahong and the local county court share the same mediation office. Every week or so, the ahong adjudicates in family disputes usingsharia. Only if he fails do civil officials step in.
Surprisingly, the Hui have not lost their religion or identity despite centuries of assimilation. Mr Ma, the retired professor, says Hui people often form close-knit communities and pursue similar occupations; restaurants and taxis in many cities are run by Hui. But their religion is “still the most important binding factor”, he says. The Hui maintain a delicate balance. They can practise their religion undisturbed thanks to assimilation. But it is their religion that makes them distinct.
This is a fine line, and it means the Hui are vulnerable to China’s shifting religious attitudes. They have so far mostly escaped Islamophobia. But bigotry is becoming more common on social media. “The greens” (a significant colour in Islam) has become an online term of abuse. So far the government has tolerated the Hui’s culture. But in Ningxia in July, Xi Jinping, the president, told his audience to “resolutely guard against illegal infiltration”—even though there is little sign of any. His government has become more repressive towards many religious groups. The Hui could be next.
But the lessons offered by the Hui’s experience are largely positive. Islam, the Hui show, are not the threat that party leaders sometimes imply it is. They show that you can be both Chinese and Muslim. At Yinchuan airport, a returning pilgrim is waiting for his luggage. He wears a white robe with “Chinese pilgrimage to Mecca” stitched in green Arabic letters below a Chinese flag embroidered in red, the symbol of an atheist party-state. “It was the experience of a lifetime,” he says of the haj—and disappears into a sea of white hats worn by hundreds of cheering fellow Muslims who fill the arrivals hall to welcome him home.
Vodafone Group Plc (VOD.L) was the biggest spender in an Indian mobile phone spectrum auction that raised a total $9.9 billion for the government, as carriers competed to boost subscribers in the world’s fastest-growing internet services market.
The proceeds of the auction, which ended on Thursday after five days of bidding, helped India raise about 658 billion rupees ($9.87 billion).
That figure was well below the $84 billion worth of spectrum on offer however, as carriers shunned the priciest category of airwaves, snapping up less than half of the total on offer.
Yet given the vast volume available, no one had expected the priciest spectrum – that offers deeper reach – to be bought now, as data demand in India is still in its infancy and data costs in the ultra-competitive market are falling, making it harder for carriers to justify big cash outlays.
JPMorgan earlier on Thursday had projected the auction would generate between $8 billion and $12 billion.The government had budgeted for 646 billion rupees ($9.7 billion) as revenue from the auction in the current fiscal year ending March. It will receive some 320 billion rupees upfront, as carriers are allowed to make payments in instalments.
Vodafone, which in recent months injected $7.2 billion in its Indian unit, the market’s No.2, bought spectrum worth more than $3 billion, according to a source with knowledge of the matter.
Market leader Bharti Airtel (BRTI.NS) bought $2.13 billion worth, while No. 3 player Idea Cellular (IDEA.NS) spent $1.92 billion at the auction.
The three rivals, which together hold more than 60 percent of the Indian market of a billion-plus mobile subscriptions, are being challenged by new entrant Reliance Jio Infocomm, backed by India’s richest man Mukesh Ambani.Reliance Jio, which has the most 4G airwaves across India’s 22 telecoms zones, last month launched services with free voice calls and cut-rate data prices, triggering a price war. It bought spectrum worth $2.05 billion.
Although among India’s top three, Vodafone and Idea lag Bharti and Jio in terms of 4G presence, and were seen beefing up their high-speed data networks by aggressively bidding in the latest spectrum sale.
Idea said on Thursday it had been able to complete its mobile broadband footprint in all 22 service areas after the latest auction. Vodafone was yet to give details.The government found no takers for the best-quality and the priciest 700 megahertz airwaves, offered for the first time.
Carriers instead purchased spectrum in the 1800 and 2300 bands that can also handle 4G traffic.
All seven carriers including Reliance Communications (RLCM.NS) and Tata Teleservices that participated in the auction bought some spectrum, Telecoms Minister Manoj Sinha told reporters on Thursday.
The auction was India’s largest by spectrum volume.
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