China's Huawei considers India plant to ease security concerns

[ao333]

NEW DEHLI, May 12 (Reuters) - Huawei Technologies [HWT.UL], China's top telecommunications equipment maker, said on Wednesday it is considering building a factory in India, after its imports to the country were slowed over government security concerns.

A Huawei spokesman in India said a facility could be set up soon if the company decided to go ahead with the plan, but did not provide further details.

The possibility of a new factory comes as Huawei's hometown rival, ZTE Corp (0763.HK)(000063.SZ), another major exporter to India, said it was also considering building a factory. [ID:nBMA007504]

China's Huawei considers India plant to ease security concerns | Reuters

Why not just say, "We're pissed off at you for our inability to make what we need. So, you must now make what we need on our soil to alleviate our unemployment problems with your technology know how and investments." in the first place?

 

[third eye]

Wonder if their products will be as cheap if made in India .

 

[RAHUL INDIAN]

Why not just say, "We're pissed off at you for our inability to make what we need. So, you must now make what we need on our soil to alleviate our unemployment problems with your technology and money." in the first place?

before making ur rant..why dont u keep ur huawei in China...we are not asking them to open factory here...keep it in China itself....

 

[Marxist]

good news if he avoided that last para......

 

[chinapakistan]

Wonder if their products will be as cheap if made in India .

India's labour prise is 1/4-1/3 of china's. Maybe huawei can provide cheaper product than before.

 

[RAHUL INDIAN]

India's labour prise is 1/4-1/3 of china's. Maybe huawei can provide cheaper product than before.

any source..??

coz as per the below article it is not what u say....http://www.steelonthenet.com/labour_cost.html
China -1.1
India-0.9
now no way it is like what u say...infact it is equal almost......or is it wrong..?

 

[Iggy]

lolz some one was saying HUwei wont loose anything if India bans them.. seems like Huwei dont think like that..they need Indian marker desperate

 

[chinapakistan]

any source..??

coz as per the below article it is not what u say....international labour cost comparisons - employment costs steel manufacturing - steelmaking production economics
China -1.1
India-0.9
now no way it is like what u say...infact it is equal almost......or is it wrong..?

That is old.
One source said according IMF that is 4.7 times, and the other said that is 1.6 times.
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Minimum wage, China vs India: is cheap labor the real answer for China’s success in manufacturing?
China has been said to be the World’s factory and cheap labor is said to be the reason why China attracts most of the manufacturing activities away from developed countries as well as from other developing countries.

Africa’s wage level is much lower than China, but they are never on the radar screen as threat to China’s position though. Nevertheless, let’s make a more relevant comparison between China and India.

India has a hard time in attracting manufacturing firms to move there. Many Indians attribute the “failure” to “that’s because we don’t have cheap labor; we focus on service industry with higher value-added”

Let’s compared the minimum wage of China and India to get a idea of who really has cheap labor.

Take China’s Guangdong province as an example. This province is where manufacturing activities agglomerate and where most immigrant workers from inland provinces are employed.

The hourly minimum wage in Guangdong province of China (Effectively July 2006- July 2007) :

Shenzhen (Special Economic Zone) and Guangzhou (two core cities, where manufacturing activities are moving out):
4.66 Yuan/hour ( = 0.58 USD= 26.7 Rs.)

Shenzhen (outside SEZ), Foshan, Dongguan, Zhuhai, Huizhou, where most of the “sweat shops are actually located:
4.02 Yuan/Hour (=0.5 USD = 23.1 Rs.)

For India, I heard that the minimum wage is between 7.5 -12.5 Rs./Hour.

(Please correct me if I am wrong; and if anyone can provide me with the minimum wage level, the actual enforcement, and the coverage of workforce, in typical manufacturing-intensive regions in India, it would be most helpful for me to make a more representative comparison)

So, minimum wage in China's manufacturing sector is between two to three times that of India!

You may argue that laws are never actually enforced in China. Well, indeed, complicated laws usually get circumvented in China. That’s why the most common violations of labor laws in China are, among others, paying normal wage for overtime work, insufficient safety and health work conditions, insufficient compensation for work-related injuries, no compensation for lay-offs... These laws get circumvented because employers always managed to maneuver the vague language of the laws in favor of themselves.

Minimum wage requirement however is in general complied by employers particularly in foreign-owned factories, because it is so easy for regulators to monitor and verify, particularly considering that most factories in the area are in the formal sector and not small workshops.

The most power force however is the market: today if you pay lower than the amount required by the minimum wage, I doubt you are able to recruit any skilled workers to work in Guangdong province, and most employers find it not worthwhile to go down the skill ladders. Labor cost after all constitutes only small fraction of the cost in typical factories producing electronic equipments and employers do not want risk having lower quality of disgruntled workers. For details see my previous post in the Bulletin: “Unlimited labor supply in China? Not anymore! Wages are hiking!”

As a matter of fact, this is exactly why the minimum wage is set to the level where it is now, i.e. almost equal to market-clearing prices. The employers basically control the whole legislative process.

But still, the minimum wage level in Chinese “sweat shops” is much higher than in India where unions have bargaining power in the legislative process of labor laws.

Well, maybe the difference is not that high. First, living expenses in China is higher; second, Chinese workers in “sweat shops” typically have at least 9 years of education.

After all, it is the whole package: infrastructure, administrative efficiency, and education level of workers, flexibility of hiring and firing, etc. that are driving the location decisions of manufacturing firms

Update:

In a report by Deloitte and Touche "India and China: The Reality Beyond the Hype", it is cited that, according to IMF data, typical monthly wage for manufacturing workers in China is almost 4.7 times that in India. But I am not able to verify the number it from the original source. (Hat tip: PSD Blog)

Posted on May 30, 2006 in China, Editorials, Global Economy, India, Written by R-Squared | Permalink

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Global-production.com - Labour cost

 

[Iggy]

any source..??

coz as per the below article it is not what u say....international labour cost comparisons - employment costs steel manufacturing - steelmaking production economics
China -1.1
India-0.9
now no way it is like what u say...infact it is equal almost......or is it wrong..?

its not actually the minimum wages..in India there are certain hurdles like workers union and there are some benefits given to the workers ..You know how much mess they will create if a worker is dismissed from a country..but as far as i know China is more friendly to Industry and there is no problem is hiring and firing employees..Employer can do whatever they want..

 

[RAHUL INDIAN]

That is old.
One source said according IMF that is 4.7 times, and the other said that is 1.6 times.
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yes in India it is lower then in China....but not 4.7...thats wrong..
its between 1.4- 1.6.....

 

[chinapakistan]

yes in India it is lower then in China....but not 4.7...thats wrong..
its between 1.4- 1.6.....

So, I am nt economic expert, so I said 1/3-1/4. Just a not strict average of that two data.

 

[RobbieS]

I bet the labor costs in India and China wont be very different. What helps lower prices for goods mfg. in China is the heavy govt. subsidies and the undervalued currency.

 

[username]

lolz some one was saying HUwei wont loose anything if India bans them.. seems like Huwei dont think like that..they need Indian marker desperate

Yep Huawei looses big time if it is restricted in India... I have worked in that company... and for them India is the biggest market outside China... I think they made $2 billion in sales in India alone last year... You don't make this big a sales very often....

Not sure the security concerns about Huawei is as legitimate as the News papers quote though...

 

[SXNJ]

Huawei can import the parts from China and use cheap Indian labour to assemble

 

[username]

self delete...