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Final month, in Transferring Manufacturing to Vietnam, Thailand, Malaysia, or India (Professionals & Cons), I in contrast 4 manufacturing hubs in Asia that appear well-positioned to obtain extra exercise, as many American firms try to “decouple” from China:
- Ho Chi Minh Metropolis (Vietman)
- Kuala Lumpur (Malaysia)
- Bangkok (Thailand)
- Chennai (India)
Chennai has been ramping up its manufacturing exercise
Properly, it appears Chennai has been ramping up its exercise quick. Perhaps even too quick, because the article Foxconn India iPhone plant extends closure, employees’ hostels inspected suggests.
Lengthy story brief, Foxconn now employs 17,000 employees there, and people employees haven’t been correctly housed or fed. The corporate’s response? They’ve “ramped up manufacturing too rapidly”.
About 1 yr in the past, a competitor of Foxconn, Wistron (additionally an enormous contract producer from Taiwan) bumped into hassle and confronted employee unrest.
Oh, and that manufacturing unit is near Bangalore, solely about 200 km from Chennai. And it additionally makes iPhones. No shock, as Apple has labored exhausting on diversifying its sources.
Is it solely Apple?
After all not. I had a glance within the city of Sriperumbudur, simply exterior of Chennai. It’s traditionally specialised in automotive components, to produce the close by Hyundai plant and others, and in chemical manufacturing (glass, paint, numerous polymers, cement…).
It now additionally counts plenty of electronics factories, too: Dell, Samsung, Foxconn, Jabil, Flextronics, Lenovo, Motorola, and so on.
And that is fairly important. It implies that, over time, this cluster will seem increasingly more as part producers. It might not develop to the purpose the place the Shenzhen/Dongguan hub is put to disgrace, however it could be sufficient to make the soar to India a lot simpler.
Analyzing the Chennai space’s execs & cons
As a reference, my evaluation of the Chennai space final yr was as follows:
Professionals
- Giant native manufacturing base (automative and digital merchandise). That ought to assist foster the looks of extra native half factories.
- Broad job market with some well-trained folks.
- A comparatively giant home market that, if the present traits proceed, will attempt to keep away from shopping for made-in-China merchandise.
- It’s mentioned to be the most secure metropolis in India. That doesn’t essentially translate to a fantastic high quality of life, however it is a crucial issue.
- Comparatively low labor price (partly compensated by decrease productiveness, many individuals will say… however that’s provided that you don’t have good course of engineers to arrange good work stations).
Cons
- There are practically 70,000 new circumstances of COVID 19 a day nowadays. But it surely appears doable to fly there.
- Corruption just isn’t large (No. 80 within the Transparency Worldwide rating: precisely the identical as China).
- Ease of doing enterprise: No. 63 on this planet. And Chennai is close to the underside of the listing when one compares the main Indian cities.
- Foreign money just isn’t very steady in entrance of the USD.
- It’s additional away from North America (however nearer to EU nations).
Conclusion
I may even point out my conclusion of final yr’s article, as I imagine on this even stronger at the moment:
If you have already got manufacturing in China, what’s the set that may carry your threat publicity down probably the most? Is it China + Vietnam? Two neighbouring nations which can be related in multiple approach?
In distinction, China + India looks like threat mitigation mixture, since India is a part of the nascent ‘anti-China block’. Besides in the event that they go to conflict towards one another, naturally, however that appears unlikely.
Many occasions of the previous 3 years have taken us abruptly, and there’s a lot uncertainty about what is going to occur over the subsequent 5-10 years. That uncertainty truly makes provide chain diversification extra essential.
Learn extra about manufacturing in India
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