By Karishma Vaswani
Business correspondent, BBC News, Mumbai
Its a difficult time for Indian industry, in particular for the manufacturing sector.
Companies are battling higher raw material costs, at a time when consumers are keeping a close watch on their wallets, because of inflation worries.
Many firms are cutting costs to cope with the slowdown.
But penny pinching can't work for everyone - and some Indian companies have found that the best way to grow a business in a downturn is to head overseas.
Breaking into China
For tractor maker Mahindra and Mahindra, it is the chance to break into the Chinese market that is the new focus of their attention.
Last week the company announced it was paying $26m to buy a 51% stake in China's Jiangsu Yueda Yancheng Tractor Manufacturing Company - the third largest tractor firm on the mainland.
At the Mahindra and Mahindra factory on the outskirts of Mumbai, the sense of satisfaction in the air is palpable.
"This is a big deal for us to have signed", one of the workers told the BBC. "Its our second deal in China - but this joint venture will give us an opportunity to really expand our business."
It's not surprising that pride in Mahindra's latest financial venture has filtered down to its workers
The signing ceremony was held simultaneously in India and in China - where the two firms signed a deal that will see them making thousands of tractors together every year.
Although initially the plan is to sell these vehicles just in the Chinese market, Mahindra & Mahindra is keen to start operations in the US and in Australia.
It's the second time the Indian firm has partnered with a Chinese one - a formula that's brought it success in the past.
Cost benefits
But what are the advantages for an Indian firm to setting up in China? And what can the Indians bring to the table?
"What Indian companies and workers bring to the table is definitely very good design and engineering skills as well as management skills," says Anjou Choudhuri, Mahindra & Mahindra's president of the Farm Equipments Sector.
"But these skills are complemented by what the Chinese bring to the table.
"They have very high manufacturing efficiency.
"Once you set the systems right, and show them what you want, they can achieve it in super-fast time, and you can work on the assumption that it's going to work fine.
"That wouldn't happen here in India - we wouldn't be able to complete a project as quickly as they are able to."
Cheaper raw materials
So is it cost or efficiency that China that makes it such a desirable place for Indian firms to set up?
"There's no denying that China is cheaper than in India - although it does depend what exactly you're looking for.
"The individual components can be cheaper by anywhere between 5% to 25% - now that's not something to sneeze at.
"If you look at the cost of making a tractor, around 70% of that is the raw material costs - which are rising all the time.
"So finding a way to cut costs is one way to manage the higher raw material charges."
Culture clash
A large number of Indian firms have already moved to China to cut costs and expand in that market.
Tata Consultancy Services has operations in Shanghai and a number of Indian executives have been scouring for opportunities in China in recent months.
Despite the cost advantage and the efficiency in manufacturing, it's not always easy doing business there, according to Mr Choudhuri.
"I think one needs to have a bit of patience, and largeness of heart", he says. "Things are not always what they appear to be. Here in India we're very process driven - and we operate with very clear procedures.
"But in China its not like that. They don't mean anything negative by it - it is just the way they are."
The Mahindra & Mahindra boss says that being flexible is the secret of success in China.
"You need to learn to meld the two cultures together - learn the different approaches, be flexible - and then you can make it happen.
"In China anything is possible."
^ Back to top | BBC Sport Home | BBC Homepage | Contact us | Help | ©
~RS~q~RS~~RS~z~RS~03~RS~)