Chinese Threaten To ‘Freeze’ Indian Equipment Segment

Chinese equipment manufacturers have started spreading their wings into other countries by introducing what they claim to be ‘quality products at very reasonable price’. Indian markets are being flooded by Chinese products, which indicate that Indian manufacturers will have a tough time in the near future if these products start capturing the market. In an attempt to study the impact of the Chinese invasion on the hospitality equipment segment, Express Hotelier & Caterer speaks with leading equipment manufacturers, eminent hospitality consultants and hoteliers.

With Chinese companies making a foray into the Indian market by offering a variety of equipment in diverse industry segments, the Indian equipment manufacturers have started feeling the heat.

Hospitality was till recently untouched but, with the Hubei China-based company which manufactures refrigeration equipment especially those used in hotels, restaurants and specialty food outlets, getting into the market, the refrigeration equipment manufacturers in the country will have to be on their toes to face the brunt. Why? Because they claim to offer products conforming to international quality standards besides being very reasonably priced.

The company is currently test-marketing its products comprising mainly of ice-cream vending machines and cold and hot drink dispensers. But it is believed that they have a complete range of refrigeration equipment viz freezers, ice makers, refrigeration cabinet displayers, non-CFC refrigerators and air-conditioners amongst others which will be introduced into the country in due course.

"This is just the beginning. I am quite sure that after tasting success in these products they will certainly enter the market with their entire range. And if this happens, it will be obvious that India equipment manufacturers will have to suffer, may be even close down their respective operations and start dealing in Chinese products," lamented an insecure equipment manufacturer based in New Delhi, on conditions of anonymity.

Major Indian players however don't consider this as a threat and feel that the products presently introduced will not really affect them in a major way. Commenting on the situation, Mukesh Ganjawala, director, Hospitality Appliances Pvt Ltd., Mumbai, asserts, "The segment they have targeted, as of now, will not have larger implications on Indian equipment manufacturers. Thus I don't consider it a threat".

Opining on the possibilities of the Chinese foraying into other related equipment segment in a big way, he comments, “It is not that easy for them to diversify into hospitality equipment segment. We already have players that are well established and have proved their mettle. Besides, quality is another thing which would prove to be a deterrent when it comes to heavy equipment, be it refrigeration or any other product.

Pradeep Thakker, director, Polfrost Air-Con Pvt Ltd, Mumbai, puts forward another aspect. "People in India are still not comfortable with the `use and throw' concept. As a result, chances of these products gaining prominence in the Indian industry are very less. A lot will also depend upon the after-sales service and availability of spare parts and other components that would be required to maintain the equipment while in use".

A similar view was echoed by Navin Rohatgi, director - marketing, Hec Equipment and Machines, Mumbai. "No matter what they boast of about their products, they will never succeed in taking over the Indian equipment manufacturers or for that matter, the equipment being imported from the US, Italy, Germany and other European countries," he said.

Hospitality experts also accord a very similar view. "Indian equipment manufacturers do not need to worry about Chinese equipment manufacturers entering into the market. The reputation that Chinese products, especially capital goods, have earned in the Indian market doesn't support their claims about quality India itself has international collaborations for vital equipment components and thus is capable of offering much better products than what China can. I have personally witnessed a situation wherein a Chinese company was disqualified just because the management was suspicious about the quality of their refrigeration equipment," said H A Mishra, managing director, Foodesign Hotels and Resorts Systems Pvt Ltd, Mumbai.

"Cost factor is the only area where they can compete with Indian equipment or equipment from other European countries. As far as quality is concerned, it is too early to make a comment on that. If one recollects, about a couple of years back, a Chinese refrigeration equipment manufacturing company entered the country with a bang. They promised a lot of things viz, quality, durability and very reasonable price amongst others of which reasonable price or should I say `cheap products' was the only claim that stood true," opined another hospitality expert who did not wish to be named.

Throwing light on the prospective customers for these Chinese equipment, Mishra said, "The only people who would be interested in these products would be those properties with restricted budget for capital goods and those who go by the cost and not quality of the equipment."

On the possibilities of using the products, if approached by company representatives, a very extreme and contrast opinion was given. While one section of the hoteliers completely ruled out the idea, irrespective of their claims, of incorporating Chinese products in their properties, the other section feels that if the quality of the product is upto their expectations and requirement they would not mind using the same.

From what we discussed so far, underestimating the Chinese equipment manufacturers will certainly not prove to be a wise decision. But giving a final verdict on the same is not possible too. Only time will decide the actual impact of the Chinese invasion on the Indian hospitality equipment segment. Till then, `just wait and watch.'