Why is China so successful as manufacturing hub of the globe? Can India successfully compete with China?
Alyasa Gan, Chief Operating Officer
To say India cannot beat China in manufacturing is a far fetch conclusion. I would say India are already better than China producing specific components that are mean for high tech at smaller volume especially for the US market . But as a whole China is the world largest producers of manufactured goods and India may have problem to beat China in this are for quite sme years. China huge local consumption is a big advantage.
To succeed in manufacturing you need a big local market that can absorb your fixed cost. The more you can produce the more efficient you get and the more efficiency you get the more value you can add and cost can be absord efficiently. Here China have a big advantage where the local consumption may be 4 to 5 times of India.
Price is a factor in the gobal market. The cheaper you can sell with the same part the more volme you can sell the part. Chinese people are expert in pricing strategy. This invovle risk, experience, market knowlege and the understanding of price elasiticity pertaining to demand. Manufacturing and marketing must go along together and work in tandem with each other. For example to penetrate a market pricing strategy may be needed and short term profit compromise for long term gain. Chinese people are exceptionally long sighted.
The ecosystem of manufacturing are game changer.. Lets take automotive for example…Are those suppliers within the vicinity of the OEM producers. The engine supply next door is cheaper than the engine import. Thus the infrastructure within the ecosystem will play an important parts in making whatever produce is competitive. In China the government helps to develop manufacturing hubs that cater for certain industries and this OEM manufacturer can get their raw material within the surrounding areas and city itself. OEM come to invest because the government sell them big plot of land where supplier can come and manufacture their parts there. The manufacturing hubs are developed near ports at discounted price and infrstructure like roads ,electricity, petrol, water are easily accessible making the product cheaper to produce and manufacturing supply parts stable and reliable.
The literacies of the population play important role. Literacy in China is above 95% but for india it is slightly below 60%. (data taken in 2010). Literacy rate is important as it reflect the quality of the human resources of the nation. The higher the rate the more employabe will be the labour force.
Gender equality is vital to a country economy. While Chinese population are aging the labor force that are employable far outweight the Indian. Chinese women are more willing to work and they face no taboo going out. While China is a socialist country the irony are that women are treated at par with the male counterpath and face lesser discrimination that their Indian neighbors.
Innovation in manufacturing are key. Chinese innovation in manucturing are second to none. Having been a manufacturing country for so long, Chinese companies that manufacture products have become very innovatives . The skills that relates to producing is incredibly efficience having learn from Japan and the West. Many Chinese companies are producing parts more efficiently then the Japanese counterpart already. The question here is believe. The Chinese people are passionate people wanting to show others they can be better and they have in many areas succeeded.
The indian labour cost is much cheaper but the productivity per man hour outweight per manhour cost hence cost per pc in India may still be more expensive taking in consideration efficiencies and manpower maintainance cost. Providing transport and lodging are one costly factor to consider in India. However the cost per manhour in India by itself is very competitive and India can take advantage of the human resources by giving training and education and improving the quality of their manpower. Chinese manpower escalating cost is really a concern so they are moving westward to more remote area for manufacturing to take advantages of the cheaper labour and at the same time eradicating poverty. Central planning is crucial in these area.
Infrastructure in China are very good for producing parts. Roads, Logistics machanism private and public are good and even more conducive than those of the developed nation. The availabilities of related parts and easy access to whatever you need, the internet services and e commerces is making China into a world model in manufacturing.
China advancement in AI will further make chinese competiveness even futher such as robots replacing people where skills are replaceable.
India can beat China but first they have to address the problem at hand. Communication system and culture are areas of concerned to India. Chinese have one central language and because the literacy rate is 95% the language barrier is resolved. In india communication can be a problem as the literacy rate is an issue.
The above are some of the issue India have to adress and there are certain advantages that India posses such as the English language being an English colony in the past.
China is a socialist country but practice meritocracy which means if you work harder you will be rewarded and you can keep those rewards. Its a collective soceity which means that you should also contribute to the well being of the societies within your proximity for you cannot survive being alone. These cultural attribute are a Chinese assets.
Culture such as working ethics,habits and believe system affect people around the world and their contribution to productivity. India is a great nation with a remarkable past but moving forward the past matter less while learning from the best are crucials point India must focus now to move this great nation forward. My advice to Indian is to forget about the past myth and believe system and that success will only come from hard work and not from lucky stars. Many Chinese are also now falling into the lucky star traps like the believe in “Fung Sui” and these believed systems create false hope and allow people to believe in luck rather than works . The harder you work the better you get is still a much more plausible logic than turning to lucky stars to change one future. This phenomena of believing in “Fung Sui” in China is strange for a socialist country yet unfortunately true. I would rather say this is also an Asian believe system, a weaknesses that Asia must get rid off and the earlier the better and replace it with scientific theoretical framework and hardwork which is the only framework that the west are so successful at.
India becoming a world beater in manufacturing is a holistic issue and a very complicated one surely possible but needing to change mindset and a supportive government that will develop policies and action plan in line with its own intention
In India 1.37billons people no one wants to work just wants to becomes a, manager ,engineer ,collectors
Without any hard working that's an typical indian mentality…
And comparing the them self to Americans and Europeans and try to become one of them
Without thinking that it's India not USA…
And those who work hard they get adopted by USA , AUSTRALIA , Germany and get citizenship and settled down there
That's why we indians are loosing and China is taking over ….
China works so hard they didn't have blood in theirs veins they have flowing fluid in Their veins is electron…., Proton , neutron…
Never ask this question again
I am Indian and I don't feel good about it…..