Will ‘Made in India’ replace ‘Made in China?’

(People’s Daily Online)

Indians like to call their country “Incredible India.” Now, another tagline, “Made in India,”is set to become an important label for this country after business magnates Terry Gou andTim Cook showed interest in moving their production plants to India.

Last week, Cook, who is the CEO of Apple, mentioned that he is considering moving theiPhone production line to India when he met with Indian Prime Minister Narendra Modi.Just a few days earlier, Cook attended an Apple Store developer forum in China and spent some time climbing the Great Wall. But for his visit to India, Cook clearly wished to focus more on business.

Compared to Apple, Gou’s Foxconn seems to be engaging even more actively in the Indian market. Last year, Foxconn declared publically that the company supports “Made in India”products. Gou said that Foxconn will start by building plants in five states in India, and then spread out in the next five years. Statistics centers and incubation bases will be established in Deli, Mumbai, Bangalore and Hyderabad. Moreover, Gou promised to invest in Indian Internet companies and mobile phone producers. According to his plan,Foxconn will build at least 10 to 12 plants in India and create 1 million jobs by 2020.

Transferring China’s industrial capacity overseas already seems like an irresistible trend.Chinese mobile producers Gionee, Vivo and ZTE are all currently planning to move their production lines to India.

In the fourth quarter of 2015, India became the biggest economic entity with the fastest growth. China is facing a lot of pressure to compete with India, especially in manufacturing. According to statistics from Boston Consulting Group, the cost of “Made in China” products has now neared the cost of production in the United States. For example,when the cost of an item in the U.S. is $1, it takes 96 cents to produce the exact same item in China.

The report cites an increase in wages, shifting exchange rates and higher energy costs in the past 10 years for China’s manufacturing stress. In India, labor cost is much lower. Just recently, an Indian mobile phone manufacturer promoted a smart phone priced at only 24yuan.

Professor Palepu Krishna of Harvard thinks it is unnecessary to worry about whether the economic growth rate of India will surpass that of China. However, many manufacturers are clearly betting on the fact that if they move to India now, they can enjoy the benefits of fast growth economy, just like China did for the past 20 years.

A Chinese mobile phone manufacturer notes that, although costs may be lower, there is still no fully developed industrial cluster in India. And considering the many uncertainties in India’s current markets, Chinese manufacturing will likely remain competitive for the time being.

Source: http://en.people.cn/n3/2016/0525/c90000-9063043.html