China Is Not Asia; India Awaits

If you read many reports from the technology press, you could be forgiven for thinking the words "China" and "Asia" are interchangeable. And while it's true that Chinese electronics production -- and soon, consumption -- will be the key to electronics manufacturing in the near-term, it's worth asking if some of China's structural and political problems won't soon start benefitting Asia's other massive hub: India.

In the United States and Europe in particular, India is thought of more as a service center than a manufacturing center. "Half of India has engineering degrees, and the other half doesn't have shoes," goes the flip, statistically incorrect insult tossed around in less-appealing corners. Where China is low-cost and high-volume, India is painted as high-cost and corrupt and vastly unequal. Where China is an endless source of skilled and unskilled labor, or so we read, India, with not too fewer people, is "complicated."

But are these just oversights, or are the broad traits we associate with each country actually helping India in the long term? What are we to make of India's role in the electronics industry now, and in five, 10, or 15 years?

It's an interesting exercise. Last week, in this space, a lively conversation started over whether the Chinese government's tendency to censor digital speech would someday soon cause Chinese electronics producers into untenably hypocritical positions. At what point would Facebook, Twitter, and, by extension, the device makers selling usability have to demand that Beijing let Chinese citizens use their devices however they want? (See: Made in, But Can't Be Used in, China.)

But in India, this battle has been fought and won. Besides having great freedom to use the same networking and digital tools at home that citizens of other democracies take for granted abroad, Indians are also famously producing many of the ideas that drive these technologies forward. If China wants to keep its 450 million Internet users closed off to Facebook's advertisers, eventually that business is going to go elsewhere. And where else can you find 450 million people online? Just across the mountains.

If that happens, imagine the stress on the electronics supply chain. It's 2013, and an engineer in India invents a can't-miss application. He or she flies to Silicon Valley, where Apple Inc. (Nasdaq: AAPL) buys the brilliant startup. Apple goes across the street to Intel Corp. (Nasdaq: INTC), and Intel designs a chip perfect for running apps like that. Intel calls a subsidiary in Shenzhen, where wages are rising but working conditions are attracting bad press and the currency value is improving more slowly than it should be.

Meanwhile, in India, media consumption is booming -- even print titles are doing great -- and Twitter is legal. And regional governments would love higher-wage manufacturing jobs, particularly for people without strong English-language skills who are not likely to get that clichéd job in a call center but who possess perfectly good manufacturing and assembly skills. The port in Mumbai, too, is twice as close to Europe as it is to Hong Kong.

Put crudely, at what point do China's policies on restriction of speech and assembly start to turn off producers enough that they turn to freer, equally populous India? At what point does India decide, paradoxically, that its reputation as the brains behind much of the electronics supply chain mean it can also be the brawn behind it -- and start wrestling factories out of Shenzhen?

At some point, people get tired of fighting with tigers, and they decide to climb to the safety of an elephant and ride away on it. Let's talk in the comments section below: Will this happen? Why? Why not?