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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 {complink 379|Apple Inc.} buys the brilliant startup. Apple goes across the street to {complink 2657|Intel Corp.}, 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?

24 comments on “China Is Not Asia; India Awaits

  1. mfbertozzi
    July 27, 2011

    Well Marc, it is a very fascinating editorial. First: you are right, people from US and Europe maybe could change their mindset and think about India in a different perspective, not limited to “service center” for savings, but as region for a new leadership in manufacturing. Second: “media consumption is booming” is giving me and additional bell. Vodafone, one of the biggest mobile operator in the world, has sold the branch in French and enforced its leadership in India. Was a randomic step or was a perfect strategy?

  2. AnalyzeThis
    July 27, 2011

    Marc, I think this is a good article and I somewhat agree with you… but India is indeed “complicated.”

    Sure, China is complicated as well, but in different ways.

    There are very valid reasons why India is way behind China, I mean, if India really did offer a similar manufacturing environment, just with more open government… don't you think there'd be a line of people queued up to invest there?

    There is a long list of reasons why China has attracted far more manufacturing investment than India. Cost, quality, and availability of labor, is a big factor, but I think one of the biggest factors is infrastructure: China obviously has a far more advanced infrastructure in place, India lags far behind in many areas when it comes to basics such as ports, roads, and even access to reliable electricity.

    Let me spin this another way: China already has an advanced high-speed rail system and will no doubt expand greatly upon it this decade. India has… well, much more basic issues to tackle before you see bullet trains careening all over the place.

  3. mario8a
    July 27, 2011

    “tiger will be always faster than Elephants”

    China will be closer to get Japan Quality levels than India getting all the distribution channels of China.

     

    Cheers. 

  4. prabhakar_deosthali
    July 28, 2011

    Yes India is an elephant !  Slow and sluggish. But it is mighty and has huge potential. Its lack of speed may have caused it to lose on Electronics Manufacturing, where speed is utmost important – to keep moving with the fast changing technology- the agility required that China has acquired

    India has succeeded well in other manufacturing sectors such as consumer goods, automobiles, fertilisers, clothing etc. which are not so fast paced as Electronics manufacturing.

     

     

  5. elctrnx_lyf
    July 28, 2011

    I know alot happens in china. Electronics design which might cost 50% of what it costs in USA. China has the cheapest manufacturing which will ship the products across the world. WHat India has is a government which has too many poltical problems to worry about than to think about electronic manudacturing. The things are defnitely changing but at a slow pace. I think there would be lot more happenings in India in the next 5 years. What it requires is local start ups and local product companies.

  6. eemom
    July 28, 2011

    While the situation today provides for China having more opportunity in the Electronics business, this may change down the road if India decides it wants to move into the market.  How long will China be able to supply cheep labor to the outside world while maintaining horrid conditions for its workers.  How long will the western world accept such a model?  China has come under fire for its practices and as well as its censorship.  India is indeed far behind, but if they decide to invest in their infrastructure, they could become a formidable alternative to China.  It's easier to invest in the infrastructure than to change the views of limiting freedom of speech.

  7. JADEN
    July 28, 2011

    Electronics manufacturing in China has got a very good development as a result of low cost in production, but this will receive challenge from India with close environment of a prodcution factor namely cheap man power cost. One important advantage that India has in electronics manufacturing is that the present electronic develops towards integrated solution gradually that require software engineers for such integration, and we all know about software development in India, this will play a good role in India electronic manufacturing.

  8. Himanshugupta
    July 29, 2011

    Its good in some sense that India and China are not fighting for the same space. Both have their strength and problems. Rather than trying to occupy each other's space they should first strenghten their respective position in Software and manufacturing. Right now the trend is that products are modelled in Silicon Valley or in Europe, they are manufactured in China and assembled and finalized in India. I do not think that this trend is going to change in coming 5 years. 

  9. Ashu001
    July 29, 2011

    eemom,

    I agree entirely.

    Infrastructure is the key.And the moment India fixes that critical issue,India will be well on its way to rubbing head and shoulders with China in the issue of Electronic Manufacturing.

    Regards

    Ashish.

  10. Anna Young
    July 30, 2011

    @ tech4people I think it's about time power change hands in the electronics manufacturing sector from China to India.

    Potential to make things right is in India. Further effort is required infrastructure wise.

  11. Himanshugupta
    July 30, 2011

    @Anna, as much as i would want India to become an manufacturing hub i am bit skeptical. The ground situation is not conducive for the electronic manufacturing until government is really serious to take on China. 

  12. Ashu001
    July 30, 2011

    Powerchange???

    That's an oxymoron right???

  13. SunitaT
    July 31, 2011

    @Himanshugupta,

     I totally agree with you. The current UPA Government is not at all serious about taking on china. Instead it is busy in implementing populist measures like NREGA which is spiralling up the inflation in India. I am not sure when will things change in India. We need someone like Narayan Murthy to lead the electronics industry growth so that we can mimic the IT success story.

  14. SunitaT
    July 31, 2011

    @mario8a,

      I agree with you that tiger will be always faster than Elephants but lets not forget its easy to tame an elephant rather than tame a tiger.

  15. SunitaT
    July 31, 2011

    “Meanwhile, in India, media consumption is booming — even print titles are doing great — and Twitter is legal”

    Marc,

    Thanks for the post. I totally agree with you that media consumption is booming. One of the major reasons for this is, media is playing very active role in highlighting the corruption, non-governance issues. Infact recent  massive corruption scams like 2G and CWG came into lime light because media continuously highlighted those issues and thus put pressure on government to act.

  16. Ms. Daisy
    July 31, 2011

    Wow!! Great analogy, and yes you are right.

    The United States and Europe both have a habit of giving labels and status to other nations to help with their personal agenda, be it capitalism or colonialism. India is tagged as a service center because that is the status these two want India to fufil, and China as a manufacturing center, regardless of what the actual facts are.

    Wether the West likes it or not, India is proving to be a force to reckon with and regardless of what designation India is accorded, they will continue to be an evolving new ecomony. Considering the high educational level in India its role in the electronics industry will continue to increase and become competitive in 10, or 15 years.

  17. Ms. Daisy
    July 31, 2011

    The change is here already! Toshiba's manufacturing move into India is the begining of change. It always takes one and the others will follow especially in light of the technical level in India and the freedom in its governance.

  18. Taimoor Zubar
    July 31, 2011

    I have always considered India to be the next big Asian giant after China. India has everything that can take it to become a leader in manufacturing. However, I think the Indian government needs to work on ensuring political stability and creating conditions which are smooth for businesses. The recent attacks in Mumbai are an example of incidents which can discourage investors' faith. Once the government is successful in being able to create peace and law and order within the region, growth and development will come itself.

  19. electronics862
    July 31, 2011

    Currently India has enough technical brain to go ahead china, only india lags the manufacturing units. Coming to consumer electronics there is a huge increase which will showcase the future.

  20. Ashu001
    August 1, 2011

    Anna,

    That is the same as saying Potential exists in America(and the rest of the Western World) to stop living beyond their means.

    Just because it can happen does'nt neccesarily mean it will.

    For the simple reason that in addition to Potential you need two other essential qualities to succeed effectively.

    1)Drive, 2)Determination and 3)Unity.

    Unfortunately I still find that missing in large parts of India.

    Regards

    Ashish.

  21. eemom
    August 1, 2011

    I wonder if the government in India is looking to improve conditions in the country and add the needed infrastructure so they can be the “next China”.  Do they see this as an opportunity they would like to pursue?

  22. Ashu001
    August 1, 2011

    Eemom,

    The Govt.is trying its best.Just that there are too many roadblocks(within and outside the Govt).

    For instance most people are still not convinced that real Estate/Infra is the best use of available land (as India has a rapidly growing population which needs to be fed richer and richer diets)-This is one example of the conrumdrum facing Indian policymakers every single day.

    Regards

    Ashish.

  23. SunitaT
    August 3, 2011

    @eemom,

      India always wants to compete with China, be it in infrastructure space, military space or for that matter any field. Only thing that is lacking in Indian's politician is discipline. Most of the politicians are corrupt, and you harldy find politician who is serious about economic growth. I believe it will take another 5 years for things to change.

  24. eemom
    August 3, 2011

    Well, it seems to me that the whole world would be a much better place to live if politicians weren't corrupt or if they weren't out to serve their own agenda.  I've witnessed a lot of arguing, politicking, and posturing over the past couple of weeks with regards to the US debt ceiling.  I had to stop watching.

    I wonder what we the people (globally) can do about it.  When it is severe enough, there is people uprising (like in Egypt) and if the people are lucky, they can actually make some changes.  Hopefully India will do just that.

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