Mirror Mirror On The Wall: Who Is To Be The Cheapest Manufacturer Of All: China or India?
October 8th, 2007 - by 2point6billion.comIts soon gonna be time that the world starts thinking of new business models for no longer can just one be the king!
Whether you are in the States, the Middle East, Indian Subcontinent, Oceania, or Europe, a product that China makes is in majority of the stores. Today we wear and carry the world factory with us as none can presently manage the sale price as well as the Chinese have done so far.
In Dubai, UAE, I chatted with a few friends in the business line (with China) who said that we just can’t compete with them. One of the friends in the textile industry had this to say
“ they have eaten up our market, even the loading/unloading charges are included in their total costs”.
Then when everyone including Indians began to think that: that’s that, and its Chinese or no one else, we saw the duopolists rising and the businesses worldwide shouting: India you are next one! But why….
India is becoming the next big choice as lower costs are driving the trend. Labor in China earns about 300 USD a month while in India its 60 USD a month. I wouldn’t go to China if I were to outsource my manufacturing.
According to Capgemini, Europe’s largest computer consultancy,
there’s a very keen interest in moving more manufacturing to India
. These guys conducted a survey of 340 mainly Fortune 500 global manufacturing companies and was amazed to know that India would be a Challenger to China in the next 3-5 years while on its way to be a world factory too.
If we look at the respondents’ plans for the coming years, manufacturing will become the number one activity to be off-shored to India. “What surprised us was when we asked about their plans for the next three or four years, they said outsourcing manufacturing (to India) was a higher priority than outsourcing back office work,”
However the concerns from India are : its sad infrastructure as regards manufacturing and supply chain are concerned. Wonder if that’s possible in the next 2-3 years. Yup, 5 years it should be. There’s lots for India to catch up: power supply and roads and airports are major obstacles. And India is working on it seeing the opportunities in its stride. Capgemini’s official said: India is building like hell, improving its infrastructure, so a lot of suppliers would like to be there.
I would like to know what you think:
1. Will India be able to beat China?
2. What gestation period should we expect India to take to catch up with China and be equally known in manufacturing outsourcing as for IT and business process outsourcing activities
3. Should China start worrying?
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October 8th, 2007 at 11:05 pm
For what we know in the middle east everything comes from China in small shops, not much from India.
India will be able to come up to Chinese levels but will take a decade or so- 3-5 yrs not at all. infrastacture is a major issue we all know.
China need not really worry thatmuch
October 9th, 2007 at 8:45 am
I dont think China needs to worry. There is enough for everyone to go round. To serve the Indian market, a lot of manufacturing will move in. Similarly, as the cost of manufacturing increases in China, the lower end of jobs will move out. Maybe to India, Vietnam and/or other SEAsian countries.
India’s market is as big as China’s. So, there is no way any company can afford to ignore it. Also by moving manufacturing to India, the companies are only hedging their bets and avoiding “putting all eggs in one basket”.
October 9th, 2007 at 2:05 pm
lets also not forget china’s go west policy - that will offse the increased costs in the coastal belt. i don’t think we will let go off our competitiveness so easily. best of luck to india and everyone
October 9th, 2007 at 2:14 pm
India will not be able to beat China at least for another 10 years. By the time India will improve infrastructure and burocracy China will also improve its resorces etc.With in next 10 years salary of Indian worker will also be matching with the Chines worker the way salary structure is going up in India.
So China need not to worry for India at this stage.
October 10th, 2007 at 5:18 am
China does need to worry. India is a serious challenger, a powerful force to be reckoned with. India is already leaps and bounds ahead of China when it comes to IT outsourcing, software-developing, servicing, pharmaceuticals etc. With improved infrastructure and lower cost than China’s, plus the market potential, it won’t be long before foreign companies flock to India to start their factories. However, it will take time for India to match China’s market share though.
China has a lot to learn from India.
October 10th, 2007 at 3:57 pm
We definitely agree that India will likely see a lot of growth in manufacturing and that China could learn a lot from India’s IT sector but the idea that India might overtake China seems kind of ridiculous. We posted about this here:
http://www.thechinaperspective.com/articles/checkuptimeforthechineseeconomyredhotipossellingustreasuries2766/index.html
October 18th, 2007 at 5:43 pm
Chin Wang.. the trouble with go west that it adds to other costs. I would see more Chinese manufacturers moving to Vietnam rather than go to the interior provinces.