China has always been the technological manufacturing hub and since Apple has decided to expand its business to India, China is wary that India could have other tech giants follow suit and threaten China’s position as the manufacturing powerhouse. Chinese state media warns Beijing that it will have to upgrade its manufacturing prowess to further attract offshore production.
“Apple’s possible supply chain transfer to the South Asian country adds further pressure on China as its domestic manufacturers show a growing interest in offshore production to low-cost countries,” the state-run Global Times said.
This move comes at a time when the US President-elect Donald Trump vows to bring manufacturing jobs back to the US and this has turned out to be a major hit on China’s manufacturing position. Now the country feels threatened that China’s competitors might be interested in further expanding their businesses offshore. The Chinese newspaper publication also says that an Apple manufacturing partner is building an assembly facility in India.
“Whether India is ready to embrace the supply chain transfer and replicate China’s success as a manufacturing powerhouse is another story. But the evolving landscape highlights the need for China to design a strategy to retain manufacturing jobs and upgrade its manufacturing industry to maintain competitiveness,” the publication said.
According to Chinese media’s opinion, Apple’s three major assemblers – Foxconn Technology Group, Pegatron Corp. and Wistron Corp – which are all Taiwanese companies, could be planning to set up India operations.
If any of Apple’s partners decides to set up assembly facilities in India, it will give way for more global tech giants and China will likely to witness a further transfer of the supply chain given to India. Thanks to Make in India strategy, India’s abundant supply of working-age labourers and low labour costs, which creates plenty of room for the global companies to open up an assembly line in India.
“And it won’t be difficult for Wistron to make a large investment or generate jobs. Apple’s partner Foxconn has displayed the potential for job creation in India,” the Chinese media’s article added.
The article also said that since China had not made any major breakthrough in upgrading its industry, it cannot afford to lose manufacturing jobs and also reminded about Donald Trump’s plans to draw manufacturing jobs back to the US.
The article, however, also pointed out that China’s skilled labour was its edge over India.
“Industrial competition between China and India comes down to the labour force, where costs and the level of skills are two major factors that influence business decisions. Although China has an edge having nurtured skilled workers over past decades, a majority of Indian states have an absolute labour cost advantage over China,” the article said.