Credit Breakdown? From India to Peru, China's international trade strategy shifts: what companies are in India's three-way payments

In the area of international trade, credibility is the basis for establishing commercial cooperation. However, the lack of integrity of certain countries has not only had a negative impact on their international image, but has also affected their potential for commercial cooperation with other countries.

India and Peru are two prominent examples where their respective behavioural and credibility issues have not only affected their relations with China but also damaged their international reputation.

**India's International Image: Demographic Dividend and Business Challenges**

Internationally, India is seen as a country with a rich demographic dividend and huge market potential. However, as more and more international companies enter the Indian market, a number of issues are surfacing. The business environment in India is often confusing and leads to a lack of trust, with many companies opting out.

India's legal and regulatory framework is complex and obscure. Companies entering the Indian market often face unexpected fines and penalties from government regulators. For example, some international companies have been heavily fined for dubious reasons soon after starting operations in India. This has led to a popular and ironic saying among entrepreneurs, "Money earned in India ends up being spent in India."

Despite the huge potential of the market, many companies are forced to exit after operating for some time. India's unfriendly attitude towards foreign companies and its unreliable behaviour is evident in various sectors. A case in point is India's poor performance in infrastructure development, especially in engineering projects. For example, India's high-speed railway projects have attracted little international interest. This is not because of a lack of technology, but because India's repeated delays in payments and lack of credit guarantees have led to a loss of trust on the part of international companies.

**Peru and China: a breakdown of trust in a dishonest transaction**

Unlike India's complex market environment and regulatory framework, the breakdown of trust between Peru and China stemmed from a single act of dishonesty in a single transaction. Looking back at trade relations between China and Peru, the two countries used to have a stable and co-operative relationship, especially in the arms trade. However, the MBT-2000 tank deal in 2009 changed all that.

In 2009, Peru celebrated the 190th anniversary of its independence and planned to demonstrate its military strength by purchasing advanced military equipment. In a highly competitive international arms market, Peru chose the Chinese-made MBT-2000 tank. For China, this was an important opportunity not only for a major export order, but also to showcase its military technology and access more international markets.

However, the deal later went sour. Peru offered to deliver the tanks and use them in a military parade, and then pay for them after the event. China at the time did not suspect too much, believing that there would be no default on such a deal between countries. However, after the parade, Peru claimed there were problems with the tanks and refused to pay. Chinese experts were sent to Peru to conduct an inspection and confirmed that there were no quality problems with the tanks. It was clear that Peru was just looking for an excuse to avoid payment.

China has responded firmly to this dishonest behaviour. Despite Peru's belief that China would compromise in order to avoid transport costs, China was willing to pay millions of dollars in transport costs rather than continue the deal. This action not only cost Peru the order, but also led to a complete breakdown of trust between China and Peru.

**Long-term effects: lost trust and markets in Peru**

Peru's actions were not just mistakes in a single transaction; they had far-reaching consequences for the country's long-term development. At the time, although China's military technology was not as advanced as that of the United States or Russia, it had gained considerable competitiveness in the low- and mid-range markets. Peru missed the opportunity to co-operate with China and lost its bridge to the Chinese market.

With the passage of time, China's military technology has developed rapidly and gradually occupied an important position in the international arms market, especially in high-tech fields such as drones. Today, China's drone technology ranks among the world's best, attracting numerous countries to make purchases. After years of neglect, Peru has also recognised the sophistication of Chinese drones and is attempting to re-establish cooperation with China.

However, China has not forgotten the unpleasant experience of 2009. When confronted with Peru's request to purchase drones, China imposed strict conditions that only allowed Peru to lease the drones instead of buying them outright and required an advance payment. These strict conditions embarrassed the Peruvian government, but they had no choice. This action by China was a clear expression of distrust towards Peru and resulted in Peru losing the opportunity to re-engage with China.

**Change in China's international trade strategy: from openness to caution**

China's strategy in international trade, particularly in its dealings with certain countries, has shifted from openness and tolerance to greater caution and firmness. The case of Peru is just one example. As China's role in the global marketplace grows in importance, particularly in the military and high-tech equipment sectors, it no longer needs to rely on orders from specific countries to prove itself.

Today, China's drone technology is a leader in the global arms market, especially in the Middle East, Africa and Latin America, where many countries are willing to buy Chinese drones. By contrast, countries like Peru, which failed to fulfil its commitments in 2009, have been gradually ignored by China. In dealing with these countries, China is no longer blindly pursuing orders, but is placing more emphasis on the credibility and long-term cooperation potential of its trading partners.

From India to Peru, China's international trade strategy reflects an important shift: in today's globalised world, trade between countries is based not only on market demand but also on credibility and integrity. In the early days of international trade, China may have tolerated some distrustful behaviour because of the need for market expansion. However, as its capacity has grown, China can now say "no" to dishonest behaviour.

**Conclusion: Credibility as a basis for international cooperation**

Whether it is the complex market in India or the tank deal in Peru, what is ultimately exposed is the credibility of these countries in international cooperation. In the era of globalisation, credibility is not only the cornerstone of business development, but also the foundation on which long-term cooperative relations between countries are built. The Peruvian example shows that dishonest behaviour can lead to the failure of a single transaction and have a far-reaching and lasting negative impact on a country's development.

For China, future international cooperation will place greater emphasis on the credibility and long-term cooperation potential of trading partners. Peru's breach of contract not only cost China a deal in the short term, but in the long term it helped China to build stronger negotiating power and autonomy in the international market. China is no longer a country just chasing orders, but an economic powerhouse with a voice in the global marketplace.

Credibility is the cornerstone of national development, and dishonest behaviour gradually erodes a country's position in the international marketplace. The lessons of Peru should serve as a warning to any country wishing to cooperate with China.