Getting the feeling China has blown it and successful companies looking to expand into Asia are now looking at India instead.
I also saw that Foxconn is looking to build Apple products in India now too.
I also saw that Foxconn is looking to build Apple products in India now too.
Publicly traded companies can't afford to play favorites, they "have to" go where the profits are and make the best of it, whether it's decades of being the mole in a wack-a-mole game with the Chinese system, or having to invest extra billions in India.
For example the largest manufacturing plant BMW has is in the US. But that's not because it's cheaper to build there, or because they want to shaft Germany. It's because they wanted access to that market in an economically and socially acceptable fashion, making them the biggest auto exporter by value in the U.S. The "socially acceptable" may not have worked since even the White House was unaware of this, presumably many Americans also.
If I was making that decision, it would be clearly easier to do business in India rather than China and likely far more lucrative with less concerns about property theft, censorship and the stain that human rights abuses will leave.
I don't know if you've ever tried to setup anything in China, it's not exactly a straight forward process or something you'd want to have to do often.
It doesn't look like this to me. India's population is within 50 million of China but has double the growth rate. Even if the GDP per capita (nominal or PPP) is about half of that of China, it still has a huge potential as a market and it never received enough attention. Companies are starting to see that potential now. We shouldn't anthropomorphize company decisions, they are generally purely pragmatic. There were money on the table, it doesn't imply India will be the biggest or most profitable market or production center.
While domestic consumption in big markets that demand local production will be satisfied as such (so an Indian iPhone might say "Made in India"), companies will still supply other markets with products coming from the factory that allows them the highest profits (so a US or EU iPhone will likely still say "Made in China").
> it's not exactly a straight forward process or something you'd want to have to do often.
Designing and building an iPhone are also not very straight forward but if it's profitable companies will do it. That's why so many companies still operate in China despite the chicanery.
What on earth are you talking about? India's growth rate in the past decade is nowhere comparable to China's. Even if you argue that China cooks their books, you cannot discount the volume and value of trade that China does with numerous other countries.
http://statisticstimes.com/economy/china-vs-india-economy.ph...
>it still has a huge potential as a market and it never received enough attention
India has hordes of poorly educated and poor people combined with a minuscule middle class - a definition that is expanded to include people one financial disaster away from poverty. The real market is China, not India, with its growing middle class and easy access to the full spectrum of manufacturing needs combined with a large market.
The growth rate refers to the population.
try doing that in india, good luck for stable electricity supply.
Still after moving segments to India the next area is where? Africa is still a source of cheap labor but too many countries there suffer from stability issues. Figure within a generation it will be both viable market and manufacturing base.
That's not the main reason for moving manufacturing. You move manufacturing to exploit lower prices in the production chain (and other logistical considerations). It's why one $10 t-shirt is produced by work in 10 different countries, and why that too is constantly shifting. It's harder to "shift" a massive centralized tech industrial manufacturing system, but if the cost savings are there, you move.
I think everyone is now aware that China is finally developing a middle class and starting to clean up its rampant abuse of its environment, meaning it's going to cost more to manufacture there. Time to look for another developing nation to exploit, and India is a gigantic and attractive target with a lot of potential.
Building (and selling) cars is quite different than phones, advertising, or internet services. BMW produces mostly SUVs in its Spartanburg plant, and it sells most of those SUVs in the USA (its biggest market), so it's more profitable (tariffs, shipping, JIT, etc) to make them locally. All other BMWs in the USA are imported.
Manufacturing your tech in your biggest market (now or the future) may be unnecessary and less profitable if you can squeeze more out of the production chain in another country. China has just been so god damn cheap for so long (and so free with its loans) that it's totally fine if they aren't even one of your biggest markets. But they won't be that cheap for much longer, especially if the USG makes it harder/more expensive.
This is $10B for /digital/ services. Google dreams of being allowed into that market. The Great Firewall prevents it outright.
True to some extent only. Apart from profits, publicly traded companies also clamour for a stable business environment. And authoritarian countries have an inherent risk, due to the nature of their government and uncertainty on the world stage.
No one can make 50 year plans for China, like they can do with US, Europe or UK. It's the same case with India too.
Democracies provide an extra level of stability.
> Democracies provide an extra level of stability.
That's very true which is why I said "make the best of it" (i.e. "of a bad situation"). Companies will have to operate under different assumptions and making different plans than they would under normal conditions. Think "peace time vs. war time CEOs". But this is what makes these companies successful, the ability to juggle with unknowns, hostile conditions, uncertain future. It's a gamble but not that different from what Tesla or SpaceX did when jumping into the unknown. They're different types of unknowns but still just as risky, able to easily sink a ship.
Five years ago, I would have agreed with you about the US. But the direction that politics have gone since then makes me a lot less sure.
The rate that corruption has grown under the Trump without repercussions is absolutely astonishing. Like any relationship, I don't know how that break in trust between the government and its citizens can be repaired.
The Trump administration's "astonishing rate of corruption" you are perceiving is being massively overstated by partisan media outlets.
Previous administrations were free to engage in all manners of corruption, while the mainstream media touted their "coolness".
This is worrisome, especially if you don't think corruption is endemic of the Trump administration. New "boundaries" have been tested and set. Future administrations have a playbook that can allow them to get away with more.
I don't agree with the CCP on many things, but China has stood up.
At this point the Chinese ascent can only be slowed down but they will only go down if they implode. Which I don't think anyone wants.
Chinese leadership priced this in years ago. If you follow ongoing political debates in China more closely they were already talking about the next 20 years being rocky as China climbs up in the world stage five to ten years ago. Why do you think China's Made in China 2025 industrial policy program was started in 2015 and OBOR in 2013?
Add to that silly power games to try and intimidate Australia(and failing) PRC strategy is very far from smart here. Perhaps it is supreme arrogance? Arrogance like that historically have led to a lot of people getting killed.
The situation with India is more complicated and there's actually no consensus inside the party. The arguments for the more assertive stance are mainly that there's right now a huge asymmetry between China and India, simply put India doesn't stand a chance in an actual conflict. The hawkish factions inside the party argue that conflict is inevitable so now is the time to clarify matters as long as China has a tactical advantage.
The jury's actually out on whether that's a smart move or not. From the perspective of the Chinese there's certainly a case to be made for it as the US is in political disarray under incompetent leadership.
> India doesn't stand a chance in an actual conflict
If its a full blown war then may be yes. But two nuclear powers going all out and all alone will not happen so others will step in. It would complicate things for China. Ideally it should be conventional and a very short one. The rules for engagement can't be escalated, that means China has to work with severe geographic disadvantages.
India vs PRC balance is not as one sided as one might think. India has nukes just like China. On the ground PRC has advantage and probably in the air as well. But guess where all the Chinese trade routes pass by? In hot war the decisive theater would be Indian Ocean and balance of power there is very far from foregone conclusion, it would take just some US intel “leaking” for Indian Navy to shut down all PRC trade.
US is mostly non-issue, unless PRC does something idiotic like invade Senkakus or Taiwan. US will do nothing directly.
Biggest move US has done was last year when they helped push a deal to build indigenous modern submarines in Taiwan with Mitsubishi Heavy industries help. Prototype presented suspiciously looks like Soryu, which is any PRC naval planner worst nightmare. And very suspicious number of MHI “retired” engineers have moved to Taiwan. Next step after is couple of the under construction Soryu being sold. That would be like a scalpel next to PRC trade throat. Taiwan been trying to get that capability for decades, US could not help as it does not build electric subs and PRC could pressure others not to sell, well they pissed Japan enough this time(those games around Senkakus and with rare earths maybe was a bad idea eh?)
In the coming decades as the rest of India gets connected to the internet, it will become the biggest market since at its current population growth it'll surpass China's population size.
How many serious start ups can be there?
"In 2018–19, the foreign direct investment (FDI) in India was $64.4 billion". Consider that there is also domestic investment, and that Google's investment is spread over many years.
There are 2 forces At play that matter to your position
1) big tech firms investing in a large local player for legal, political connections and arms length sheilding from the necessary local corruption
2) normal manufacturers moving to Vietnam - which has accelerated since the trade war due to COVID.
The second is best described by a New Zealand owner who was looking for factories to build stuff in, aside from China.
India was described as passable, if you Are an MNC. Then you can afford the workers while ensuring quality.
For anyone else, the quality of service from factories drops of fast. There simply isn’t the wherewithal in talent or experience to do manufacturing at scale and at competitive pricing for the typical firm who wants to move manufacturing hubs.
In contrast He had videos of Vietnamese factories working towards throughout targets and being a viable alternative to China.
India needs to reform Labour laws. It’s been a great hope that this govt with its monumental single mandate would have taken the issue and freed the system up so manufacturing could be unshackled.
When disagreeing, please reply to the argument instead of calling names. "That is idiotic; 1 + 1 is 2, not 3" can be shortened to "1 + 1 is 2, not 3."
Even if you don't like China, you should not pretend they are a in a weaker position than they are.
China is aging. while India have plenty of young cheap labors. its only natural for companies want India's labors and market.
Its certainly debatable whether belt and road is successfull, but I have recently recieved package from China to UK by Rail so at least some good came of it.
Also the countries China is investing in were neglected by West and wall street for decades.
The advanced economies are dependant on cheap goods, and not specifically Chinese goods. This will become more and more clear as decoupling gains pace. Corporate Japan has largely decoupled from China, with SK following close behind. US, Taiwan and European outfits are next.
China, however, is truly dependent on exports to advanced economies to sustain its economic and political model at its current stage of development. Its population is just too large.
> hindered by the large population.
This just doesn't make any sense.
Having a large population doesn't automatically result in a viable consumption based economy.
That hasn't worked out too well for them.
The reason no other country wanted to fund these projects, is because they have a history of defaulting on those loans. Additionally, these projects are a wound that doesn't stop bleeding. China has to continue pouring money in them for maintenance and upkeep too.
Unless China's goal is geopolitical neo-colonialism, I do not see any of their international infrastructure projects paying off any time soon.