A CHINESE COMPANY IN INDIA, STUMBLING OVER A CULTURE

[Chinese companies have embarked on ambitious overseas expansion efforts, snapping up land in dozens of countries to build factories, industrial parks, power plants and other operations. While the investments provide critical support for many economies, Chinese businesses are struggling to navigate complex cultural, political and competitive dynamics.]

By Keith Bradsher

“This factory should not come here, because it will ruin the spirituality 

of the mountain,” Kailash Nemade, a monk, center, said about Foton's

arrival in Shinde.CreditAtul Loke for The New York Times

SHINDE, India — When a Chinese truck company wanted to open a factory in India, its president looked at sites that had a mountain in back and a river in front — especially auspicious locations in the traditional practice of feng shui.

The company, Beiqi Foton Motor, found a seemingly ideal spot, securing 250 acres of farmland in this western Indian village. Foton wants another 1,250 acres nearby to build an industrial park for suppliers.

But the mountain here is sacred to many Hindus. For at least 2,000 years, the cliffside caves have been home to generations of monks. One of the most revered Hindu saints is said to have attained a pure vision of his god during the 17th century while meditating in the highest cave overlooking what is now Foton’s site.

The culture clash was immediate.

Foton erected barbed-wire fences and hired uniformed guards to keep out trespassers. Cattle herders and Hindu pilgrims have repeatedly trampled the fences. The monks do not want a noisy neighbor.

“In today’s life, spirituality and science are both important, and neither should deny the other,” Kailash Nemade, a monk, said during a pause from chanting religious poems. “But this factory should not come here, because it will ruin the spirituality of the mountain.”

Chinese companies have embarked on ambitious overseas expansion efforts, snapping up land in dozens of countries to build factories, industrial parks, power plants and other operations. While the investments provide critical support for many economies, Chinese businesses are struggling to navigate complex cultural, political and competitive dynamics.

China’s economic slowdown this year, along with a stock market plunge and a currency devaluation, have not deterred the country’s companies. Many have accelerated their global shifts as their home market becomes less attractive.

But Chinese enterprises lack the experience of their Western counterparts, which have spent decades developing international operations. As Chinese companies have built their businesses largely at home, they haven’t had to address the same challenges.

In China, companies with strong Communist Party connections can bulldoze communities and religious sites. The Chinese government bans independent labor unions. While strikes and other labor protests are becoming more common, they are quickly squelched by the government if they show signs of spreading.

As Chinese companies now venture overseas, they are dealing with a wave of resistance.

In Africa, workers at Chinese-run oil fields and copper mines have gone on strike over low pay and dangerous working conditions. The Myanmar government halted China’s construction of a hydroelectric dam there after protests over environmental damage and the displacement of villagers. And in Nicaragua, residents have resisted the planned resettlement of villages to make way for a canal proposed by a Chinese businessman.

In India, Foton’s experience provides a look into the internal struggle that countries face.

India desperately needs outside investment to support the 13 million young people entering its labor force every year and to begin relieving chronic unemployment in its countryside. Indian and Western factories within a few miles of Foton’s site have created thousands of jobs.

Western companies have tried to tread more carefully in India, in some cases learning from past mistakes. They have worked closely with communities, explaining their projects to residents. The companies have typically sent teams of executives, often with overseas experience.

Foton strongly defends its plans. The company says that its plant and supplier park will create a much-needed economic boost.

“Because of these projects, the employment of thousands of people, even tens of thousands, will be accomplished,” said Zhao Jingguang, Foton’s executive vice president.

But Foton keeps revising production plans and delaying construction. With the project stalled, the promised jobs have not materialized.

Foton’s corporate style has also caused friction. It managed the project mainly from Beijing, sending executives to India for two-week visits. When Foton’s Indian managers needed to work with the main office, they sat through videoconferences that lasted hours, with Chinese executives often speaking at length in Chinese.

Mr. Zhao denies that the company picked the location for its feng shui, which the Chinese government condemns as superstition. Still, he acknowledged that “there is a river, should be good feng shui.”

But the land deal has been less than harmonious.

Regulations mandate that factories be located at least 500 meters from temples, preventing construction on half of Foton’s site. A state agency also reserved land for a 15-yard-wide dirt access road to help pilgrims reach a footpath to the caves.

Despite Foton’s efforts, many villagers and monks say the factory would still be too close. Pilgrims, who can number over 5,000 during religious festivals, would have only a half-acre site to pitch their tents.

Sitting cross-legged in a pink-painted cave, the monks’ leader, a Hindu holy man named Vishwanath Maharaj, listened closely when asked for his view on Foton’s plans. But he merely gave a slight smile and shrugged his shoulders, preserving his 35-year vow of silence.

The Land Grab

When President Xi Jinping of China arrived in India a year ago for a visit, he was welcomed at each stop by gleaming military honor guards, including a row of turbaned cavalry lancers on horseback.

Mr. Xi and his host, Prime Minister Narendra Modi of India, smiled as a succession of deputies and executives exchanged more than a dozen commercial and cultural agreements with one another. One of the agreements called for the creation of the supplier park, where Foton would rent out space to Chinese parts manufacturers.

China and India both want to strengthen their economic ties, even as their militaries remain wary of each other. The $300 million Foton project, including the plant and the industrial park, is one of China’s largest investments in India.

“Your vision cannot be too small,” Mr. Zhao said. “Nowadays, people say you must have an international vision.”

Following the lead of the United States, Japan, Europe and other big economies, Chinese companies are diversifying overseas to find new customers, markets and opportunities.

A decade ago, China’s overseas purchases of companies, land, equipment and other physical assets totaled just $20 billion a year. Last year, China’s total was $120 billion. It trails only the United States, and American overseas investments have been heavily aimed at limiting taxes.

Pune and its environs have long been a hub of foreign investment, tracing their industrial roots to a munitions factory built in 1869 under British rule. Big assembly plants now churn out Chevrolets, Mercedes, Mahindras and other cars. A Corning plant makes fiber-optic cables. A General Electric factory creates wind turbines.

For Foton, India offered cheaper labor than its home country and a strong market for its products. India’s position between Southeast Asia and Africa provided a natural hub to supply other developing markets as well.

Even without the supplier park, Foton has leased the biggest site in the area, 250 acres, for 95 years. Corning, G.E. and others nearby have less than 100 acres apiece for their factories. A Bridgestone tire factory occupies 185 acres.

In Shinde, speculators have bid up the price of land, expecting that the state government will buy it and lease it to Foton. But many villagers are opposed to selling, since the deal would eliminate much of the farmland that is left.

Kaluram Kendale, who grows onions and raises buffaloes, does not want to sell. He is upset that the state government already forced him to sell five of the 12 acres that his family farmed for generations.

“If I sell the land, it’s one-time money,” he said. “But my land is beautiful, it’s fertile, and it’s a permanent source of income for my family.”

A Village Divided

Chhaya Shinde, who grew up in a mud-walled sharecropper’s cabin with dirt floors, was a star student, learning to read and write Hindi and Marathi, the local tongue.

Her father, unlike most in her impoverished hamlet, wanted his daughter to get an education. He paid $16 a year for Ms. Shinde to attend a school in a nearby village. She dreamed of becoming a social worker to help the elderly.

Ms. Shinde’s education ended after Foton came to town.

While landowners got paid for their fields, sharecroppers got nothing. Ms. Shinde’s father, a millet farmer, lost much of his income. Ms. Shinde had to drop out of school a year ago.

“I had no money,” said a tearful Ms. Shinde, 18. “I was at home, so I had to be married off.”

Since the arrival of Foton, the gulf between the rich and the poor here has widened.

The Panmands, who owned the land where Ms. Shinde’s family farmed, sold half of their 58 acres for the Foton factory and two other factories. With the proceeds, they built a 10-bedroom villa with a large courtyard and a fish pond.

 “For people who are rich, it’s beneficial because they can buy a lot of things,” said Vijay Panmand, 28. “But for the poor, it is not good. Where will they work?”

When Suresh Ghanwat sold land, he invested a portion of the money in a three-story apartment building, renting out the top and bottom floors. He also set up a concrete-block business, producing a daily profit of $80.

But many families are like Ms. Shinde’s, trying to survive in cramped, dark cabins.

Indian laws on land deals are fairly generous by developing-country standards, calling for compensation for tenant farmers and sharecroppers. But to qualify, they need to live on the land or record the arrangement in official logs. Ms. Shinde’s family did neither.

Ms. Shinde, who wears a pair of simple barrettes to hold back her dark hair and slim golden bangles that encircle each wrist and ankle, now labors part time on one of the Panmand family’s remaining fields.

“I wish they had never come here,” she said of Foton, wielding a hand-held scythe to cut pearl millet. “Those who were rich became richer, and the poor, poorer.”

Foton vs. the Civil Servant

When Foton acquired the land here three years ago, young babul trees sprouted as soon as the farmers left. Today, Foton’s site has roughly 12,000 full-grown babul trees, a widely loathed plant with two-inch thorns.

Their height, up to 10 feet, brings a tree preservation ordinance into play. When Foton eventually starts building, it will have to get permission from the forestry ministry to cut the trees down.

As the babul trees flourish, Foton’s leadership has agonized over what to build, according to five former executives. The original plan called for welding, assembling and painting heavy-duty trucks.

The plan shifted to building delivery trucks, and then to assembling sport utility vehicles and cars. In that time, Foton’s Indian operation has had four chairmen and at least three executive vice presidents.

Mr. Zhao of Foton said the company hoped to start building the factory by early next year. The first vehicle most likely will not roll off the factory line until at least 2017.

The supplier park looks less certain.

Both the Beijing government and the New Delhi establishment regard the deal as important. But Foton did not enlist the support of local bureaucrats, and a civil servant in Mumbai could ultimately derail the project.

The state land agency, the Maharashtra Industrial Development Corporation, has to approve the deal. And the agency’s chief executive, Bhushan Gagrani, has resisted, citing a dearth of farmland and earlier disputes with families like the Ghanwats. He wants to steer the supplier park farther inland, where unemployment is more acute and farmland abundantly available.

But the alternative sites would require supply trucks to haul parts for several hours. Foton, Mr. Gagrani said, did not send anyone even to look at them.

The Indian prime minister, accompanied by an entourage that included Mr. Gagrani, traveled to China in mid-May. Chinese officials pressed the case for the Foton supplier park again.

But a deal may not be possible now.

Foxconn, the Taiwanese contract manufacturer, has decided to build a mobile phone factory nearby. Foxconn negotiated its deal directly with the state government.

“Any land left,” Mr. Gagrani said, “we are giving to Foxconn.”

Jonah Kessel contributed reporting from Beijing.

@ The New York Times