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India China Elctronis 2005 (Purohit)
India China Elctronis 2005 (Purohit)
BY
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More than 77 percent of the growth of manufacturing in developing
countries will be in China, increasing its share of global electronics
production from 8 percent to 14 percent, says the study from International
Finance Corp. (IFC), the private sector arm of the World Bank Group, and
management consulting firm Booz Allen Hamilton.
At the same time, going by the potential demand as well as the need to
Support the massive requirement for the software and services, the future
growth. Trajectory can only be a rising curve with plenty of new
opportunities opening up.
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• Annual PC sales expected to touch 14 million by end of 2010 from the
present 1.8 million.
• Mobile phone subscriber base to exceed 30 million by 2005 from the
present 5.2 million
• More than 10 million colour TV market by 2005 from the present 5.6
million
India requires $160 billion hardware equipment and another $60 billion
component to support the software target of US$87 billion by 2008.
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CURRENT SCENARIO
Emphasis on Quality
Indian electronics, like many other upcoming sectors are facing a major
paradigm shift from changing the conception of a commodity to a brand.
This includes the use of standardisation and quality assurance techniques
like the ISO 9000, ISI, etc. These methods, in the long run, will give India
an edge over the Chinese Commodities.
Customisation
Just like times change, so do customers wants and needs. They grow
more and more “fussy” about what they want. Any concern, to survive in
the global scenario must move in perfect synchronisation with the
market. India has always been an expert at this ‘Just-in-Time’, ‘customer
tailored’, production process in contrast to China’s mass-production
theory.
Innovation
India has pioneered a great deal of innovative ventures, from the
PARAM super-computer to lower-end consumer electronics. China has
been running on its belief in reproduction of innovation in a cheaper
manner. This will benefit China only in the short run. The current global
scenario demands continuous innovation and creativity, which India is in
a much better position to provide.
Specialized manpower
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China certainly offers cheaper labour, but we must also keep in mind
that we are referring to only blue-collar labour here. This implies that
China does have a competitive advantage in manufacturing. However
India has the largest workforce of specialist in the world. From
engineers to managers to doctors, we have them all. This gives us the
edge in administration as well as the service industry.
WEAKNESSES
Resistance to change
The Indian government attitude towards change is quite dismal. Their one-
track thought process makes it very difficult to realize and work towards
moving with the rest of the world. Chinese communist government certainly
has the dynamism required to move the country with the global scenario.
Protection of SSI
The Indian theory of protection of the SSI, contradicts its strife towards
achieving economies of scale. SSIs reduce the scales of operations hence
shrinking opportunities for creating mass-markets.
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STRENGTHS AND WEAKNESSES OF CHINA
Consumer goods from China is flooding into the Indian Market. A
Calvin Klein or a Rolex look-alike watch, Reebok (shoes) look-alikes can be
picked up for a low price. Dry cell batteries, electric irons, ceiling fans, toys
and cycles are among the few other items which are giving a very hard time
to the local industrial products. And these Chinese-made goods are fast
replacing indigenous goods. Lock market is yet another example. Chinese
totally captured lock market. Who will now go for an expensive Goderej
lock!
The presence of Chinese goods is evident all over the country whether
it is Mumbai, Madras, Delhi, Calcutta or Cochin or any other small towns.
Customers seem to be quite happy as they are getting goods at a cheaper
rate. But the industry especially manufacturing sector is shocked. As
consumers have begun to opt for these cheap goods. At the same time
retailers are also happy since they get better commission.
Doubtful Quality!
The price is the attraction of the Chinese product and not the quality. Dry
cell batteries, for instance , enter India at an undervalued price of 50 paise
each. After paying all the duties when it enters retail outlets it is sold for Rs
2. Indian manufacturers say the lead inside a battery alone costs at least Rs
2 here. If the Indian battery's life is 50 minutes the Chinese one last only 23
minutes. Similarly Chinese bicycles with a price advantage of over Rs 500 is
available in Indian market giving much cause of worry for Indian bicycle
manufacturers. The European Community , on grounds of safety, has
refused entry to these bicycles, which is made of alloys instead of steel. The
quality of items like watches, digital alarm clocks and other electronic
equipment is also doubtful.
Impact:
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This Chinese invasion had done harmed our industries specially some of
them considerably. For instance Eveready Ltd's subsidiary unit Eveready
Energiser Miniature Ltd, which manufactured miniature batteries had to
close down. Similarly T-Series fans which controlled 5 per cent of the
organised sector also had to close down its manufacturing operations at
Noida. Chinese fans come with an in-built inverter. In case of a power
failure it will continue to work for next two to three hours. This provide an
answer to the problem of frequent power cuts also. Against a retail price of
Rs 1,150 for a domestic fan, imported Chinese fans cost anything between
Rs 800 and Rs 900. The ordinary ones cost Rs 400 and with duties, the cost
in India comes to Rs 660 only.
Dumping:
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army works in the factory for the benefit of the country. Also it has also been
reported that the Chinese prisoners are brought in the night in the factory
and they are made to work during that night shift.
Less Formality
Today there is the age where you will be appreciated more if you are to
deliver the goods on time. One of the important step in doing so is having
less formalities or in other words one window clearance which China has
for most of its electronic goods.
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communes which provides, a vast pool of cheap Labour, a large and rich
expatriate community and a rich mineral base, supplemented by large FDI
inflows has contributed to lowering production costs.
India must see ensure that the Chinese exporters are not misusing the
Indo-Nepal bilateral treaty for the purpose of dumping goods into India.
India had provided Nepal with special facilities for import of goods
through the Calcutta port, (via the road route). Under the agreement with
SAARC countries like Nepal and Bangladesh, imports are allowed under
concessional rates.
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What is the solution? :
The time has come for India to learn from the Chinese experience.
Industry must explore India's export potential to China. Another possible
solution lies in removing the reservation for small scale industries (SSI) and
permitting the entry of bigger players in areas which could lead to
economies of scale, resulting in lower prices and better products. It's time
for the government to open up the SSI sector to fight the Dragon.
What now comes from China is only marginally better than what is
available in India, and most of those products are not really of international
quality. Our advantage Infact lies here. When we compete with in the
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international market, price advantage alone cannot win the race. Quality
matters! By supplying inferior goods in fact China is loosing Indian market!
For instance, India exports about 70 per cent of its software to the US
and Europe, while China exports about 90 per cent of its hardware goods to
the western markets. But in turn the US exports 90 per cent of software to
China, and 60 per cent of its hardware to India.
If India and China can come together, they can not only cater to the
entire world, but also dominate their own domestic markets.
Though India is moving in the right direction so far as its import tariff
and other taxation measures are concerned, a lot more needs to be done on
labour reforms, single-window clearance and efficient transport sector, be it
roads, sea ports, or airports for faster shipments and travel.
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According to Chinese Electronics & Information Industry Chamber of
Commerce project manager Yuan Xull, India should have more Special
Economic Zones and high technology zones so that Chinese enterprises and
other overseas investors could set shop here as was being done in China
over the years.
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