As the factory to the world, China helps the average Indian consumer fill her shopping cart. Yet, the Made-in-China label often causes the nose to wrinkle when the product is weighed on the fulcrum of durability. Therefore, it might come as a major surprise to auto buyers in India that vital components in their cars and bikes – the most durable and expensive consumer products sold – have their origins in our giant northern neighbour that now sells more automobiles than the US. And the range extends from the spartan to the sublime.Much of the sourcing traces its origins to global M&A. In the most recent such deal, Li Shufu, the chairman of Chinese automaker Geely, a Chinese multinational automotive manufacturing company headquartered in Hangzhou, Zhejiang, acquired a 9.69% stake in Daimler, the German automobile major that has a strong presence in India.Daimler’s Mercedes Benz India is the country’s largest luxury car brand, while Daimler India Commercial Vehicles (DICV) is also a formidable player with Bharat Benz trucks and buses. The $9-billion stake purchase by the Geely chairman is making him the biggest-single shareholder in the group, with a strong say in decision making.Geely had already made its indirect entry into India with the acquisition of Swedish passenger car company Volvo Cars in 2010. It acquired one of the world’s ‘safest car’ manufacturers from Ford for $1.3 billion in cash and issued $200 million notes payable to the American company. Hence, it is a myth that a Chinese-owned car is yet to debut on Indian roads!Volvo Cars has been in India for long and operating in a niche luxury segment. Looking at the mega trend in the automobile space, Volvo Cars is planning globally to launch all new models after 2019. Reports suggest that Geely’s latest move of buying a stake in Daimler is mainly motivated at strengthening its presence in the electric vehicles (EV) space. Even now, most local EVs have their components imported from China.Last year, Geely invested $3.9 billion to become the biggest shareholder of Volvo -- a leading truck and bus maker. Volvo has a joint venture with Eicher Motors and it also sells high-end trucks and buses independently in India. Geely has also shown its interest in coming to India directly.In 2005, China’s Qianjiang Group Co bought Italian bike maker Benelli, and a few years ago, the Chinese Group signed a joint venture with Pune-based DSK Motowheel for selling Benelli bikes in the country. Currently, Benelli sells premium bikes at prices ranging between Rs 2 lakh and Rs 12 lakh.Similarly, Chinese electric bus maker BYD is setting up a plant in India with an investment of Rs 200 crore, partnering the Hyderabad-based Gold Stone Group and the Indian entity is called Goldstone Infratech. Sales have begun.Goldstone Infratech recently supplied 25 electric buses to Himachal Pradesh Transport Corporation, and it has bagged other contracts. One bus costs at least Rs 2 crore and about 75% of the components are now imported from China or elsewhere by BYD.BYD Company, the parent company of YD Auto Industry, a public listed company, is one of the top 500 Chinese enterprises with interest in automobile, new energy and light rail. Earlier, it had supplied 12-metre low-floor AC electric to Chandigarh Transport.China’s largest automaker and General Motors’ (GM) partner in China, SAIC Motor Corp, has already started a fully-owned car company locally, MG Motor India. SAIC Motor Corp is setting up a factory at Halol in Gujarat with an investment of Rs 2,000 crore. This facility was earlier with GM. The first SAIc product, an SUV, is expected to roll out in 2019. SAIC sells more than 6.5 million vehicles annually around the world.Recent ly, Zhengzhou Coal Mining Machinery Groupowned SEG Automotive bought the starter motor and generator business divisions of the Bosch Group that has a strong market presence in India. For this deal, India’s leading component maker Motherson Sumi System was also in the fray.The acquisition of troubled airbag and safety parts maker Takata by Ningbo Joyson Electronic Corp further strengthens China’s hold in the India OEM supplier space. Takata has a strong base in Rajasthan, Tamil Nadu and Maharashtra. Ningbo Joyson reportedly made this deal through its 100 per cent-owned American entity Key Safety Systems.Such deals would further stretch the Indo-China bilateral trade deficit. Last year, the Indo-China bilateral trade reached its highest at $84.44 billion, with India’s exports to China at $16.34 billion, compared with imports at $68.10 billion. The difference totals about 70% of the country’s total crude oil import bill of $72 billion.The inequality further widens in the automotive sector. China exported auto parts worth $3.95 billion to India in April-Feb 2018, while India’s dispatch of auto parts to China stood at $295 million. Chinese imports of auto parts were at $2.6 billion in FY14.The Make in India programme aims to raise the contribution of the manufacturing sector to 25% of the Gross Domestic Product (GDP) by 2025.Currently, manufacturing adds only 17% to the India’s GDP. The automotive industry commands 22% of the country’s manufacturing GDP and 7% to India’s overall GDP.The industry has a major bearing on safety. Every hour, 17 people die due to accidents in India, which is one of the highest rates of fatality in the world. “The biggest concern is on the safety of the vehicle due to the quality of the auto parts coming to India, especially from China…With increasing stakes by Chinese vendors, the situation is going to be further challenging,” said Vinnie Mehta, director general of Auto Component Manufacturers Association (ACMA). In the last study conducted by industry groupings SIAM & ACMA, more than 30% of the total aftermarket auto parts were found to be spurious.Tyres too have a distinct Chinese tread. Of the 115 BIS licenses given for selling tyres in India, 36 are to Chinese companies. The import of automotive tyres from China surged more than three-fold from Rs 582.86 crore in FY14 to Rs 1,650.01 crore, said Automotive Tyre Manufacturers Association (ATMA).In FY17, China accounted for 89% of the TBR tyres imported into India, cornering 23% share in the total TBR tyres market. Imports continue to cater largely to the replacement market.“Import of Chinese tyres, particularly TBR tyres, is often at dumped prices, resulting in market distortions, loss of revenue to the exchequer and below expected level of service and support, warranty, claims, etc. for the tyres buyers,” said Rajiv Budhiraja, director general, ATMA.China National Chemical Corp recently acquired Italian tyremaker Pirelli in 2015 for $7.86 billion, and it is also exploring aggressively the Indian market to establish Chinese control in the premium passenger vehicle segment.Chinese influence in the Indian automotive industry is only going to grow in the future as the world’s biggest car market at about 28 million a year finally begins to report slowing growth. A large number of Chinese automobile companies and auto parts makers — Changan Motors, Great Wall Motors, Beiqi Foton, Kingfa, Lesso, and Wanfeng Auto - are looking at the Indian market seriously.With EVs becoming the future industry standard, China will have a strong influence in the global market as well as in India due to the geographic proximity.As India makes more EVs, China’s dominance will further increase because of its leadership credentials in Lithium, the key ingredient for car batteries of the future.“China enjoys significant scale and cost advantages in the sector. The same is also getting rapidly replicated in the electric vehicle space, with active policy support by the Chinese government. And with large investments in the new energy space, China is likely to emerge as a trendsetter and significant technology driver in the electric vehicle space in the coming years,” said Subrata Ray, senior group vice president, ICRA.China is already the world’s largest EV manufacturer with almost 60% of the global market share by way of volume. From next year, China has mandated that at least 10% of the total sales of cars from OEMs have to be NEV ( New Energy Vehicles : BEV, FCV, Plug-in Hybrids).“The Chinese market next year will be close to 28 million vehicles. Around 10% (2.8 million vehicles) will be NEV, which is almost as big as India’s passenger car market. So with such huge sales of NEV, China will create a huge ecosystem for battery manufacturing, recycling, charging infrastructure and other related components of the EV package,” said Rajesh Singh, an auto industry veteran.“These huge numbers would lead to a large number of companies from the NEV ecosystem eventually evaluating entry into the Indian market, which is taking baby steps in the direction of NEV,” Singh added.Therefore, the biggest threat to the ‘Make in India’ programme could well be China as it threatens to dominate both the local market and where India traditionally exports. That might please some consumers here, but could cause the brows to be furrowed at the automotive boardrooms in India.