In an article written in Chinese by Wang Xinxi and published by Sina Tech, the author shares reasons why India is starting to threaten China’s dominance in some parts of the manufacturing sector.
In the mobile phone manufacturing business, global players such as Samsung, Apple, Foxconn, have invested in India-based manufacturing over the past couple of years. In July this year, Samsung inaugurated the world’s largest mobile handset manufacturing facility at Noida, in the northern state of Uttar Pradesh. The facility will produce 120 million mobile phones per year. Virtually all of China’s phone manufacturers have established manufacturing in India: Vivo, Oppo, Xiaomi and more. Xiaomi has two factories already, and earlier this year the company announced plans to open a third.
Taiwan companies such as Acer’s spin-off manufacturing arm Wistron and Foxconn made agreements with the Indian government to rent land for local manufacturing purposes.
Chipmaker Mediatek announced plans to slow manufacturing programs in China as it shifts toward India and other Southeast Asian regions. Electronics makers such as Samsung, Toshiba, Panasonic, and Sony, are reportedly considering slowing investments in Chinese manufacturing as they set their sights on countries like India. Chinese manufacturers are also moving more of their operations abroad in a bid to become more globally relevant and competitive.
The author suggests three reasons for this shift:
–> Saturation: manufacturing growth and smartphone sales in China are slowing, while the market is comparatively unsaturated in India, where smartphone penetration is still only 30 percent.
–> The Government of India has incentivized local production through a variety of policies, including raising import duties on critical parts to make direct investment in India more financially compelling to manufacturers.
–> Money: rent, equipment, and labor costs are all typically lower in India than in China, and manufacturers can produce goods more affordably there.
