India rather than China?
Globalization and the development of technological innovations have deeply modified the economic scene.
China has been attractive during the last two decades but India is nowadays shown as the key destination for the companies looking forward to secure their supply chain and reduce their costs.
Distance issues with China:
- India is only 6900 nautical miles away from Le Havre (France) whether China is 12000. This is directly impacting lead time and freight charges.
- The time difference is much more important between Europe and China which causes communication issues.
- Wages have quickly increased in China and have now overpassed India
- Components imported from China are subject to European custom duties where Indian ones are not.
China’s authoritarian political regime is also a source of threat for importers as it can generate instability within the country and lead to unexpected changes having considerable impacts.
Policy issues:
- Heavy Government schemes for exporters which is considered by World Trade Organization as dumping are artificially increasing the exporter’s margins. If these stop, Chinese suppliers will have no other choice to increase their prices in order to maintain their margin.
- Yuan exchange rate is artificially maintained at a low level to sustain exports and Chinese government may decide someday to change his monetary policy. The prices in Euros or Dollars would then grow up to some unexpected levels…
Indian middle class is booming. It is young, dynamic and turned towards the West.
The mechanical skills are excellent and raw materials quality are strictly controlled.
Be smart & keep your eggs in the Indian basket.
