Okay lets debate this out, in all fairness I am not putting India down but I'm oppose to thinking plain demographics will do the job.
China's dominance today is not only built on manufacturing but a whole host of other factors include huge consumerism spurred by Europe and the US during the good days. Because labor was so cheap and these countries were moving on to higher skilled jobs (i.e Finance, Real Estate ) they happy moved entire supply chains over to China without thinking too much. This allowed China to not only dominate the manufacturing space but gain a lot of manufacturing know over the years which even most companies who outsource the work to them do not have. This allowed China a dominance in
- Supply chain advantage
- Skilled workers
- Huge Surplus (from the days before Subprime)
- First class Infrastructure to support the supply chain
This is not forgetting that China's government is actually easier to do business with as an outsider and compared to India, plus in the early days Hong Kong & Taiwan helped a lot in linking China with the outside world by acting as intermediary. This is important as both countries used their transparency to gain investor confidence and then negotiating with their fellow Chinese thus making investment easier.
If India wanted to move into this space given the younger demographics as per say, the question I if I where a company looking to move my factory are as below
- Who will be the target market? Local or Overseas
- Are there Skilled workers or do I need to train
- Are there supply chain advantages in the location
- Is the labor cheaper?
- How is the infrastructure to get my goods to port
- Is transportation cost cheaper to my target markets
The question above are posed for a manufacturing company looking to cater to volume exports to the international market. Unless 50% of the above can meet the criteria as a company its a risk to even consider moving.
I am not surprised Huawei and ZTE moved into India as India is a huge consumer market, but I believe the move is mainly to service the local market and not the overseas one (Or least the volume is small).
Given that countries with manufacturing expertise are tapped dry of funds its leaves countries like China and Germany to consider outsourcing their manufacturing bases. But even with lower cost outside so I doubt the CPC will allow manufacturing to leave in droves in the next 10 - 15 years given that they still have a huge population that needs employment, in fact the CPC is deliberately allowing workers salaries to go up in the developed region and force the manufacturing inland towards Xinjiang to modernize China's interior plus building the rail systems to support this.
I do agree the government policies towards FDI are important though, however I feel that India's government is still not doing what it needs to get a move on. If you look at this link
Ranking of economies - Doing Business - World Bank Group and you pull out all the developing countries in excel you will notice that over the past few years the countries that have picked up the slack in manufacturing are the ones with higher rank on the scale (I.e Vietnam, Malaysia, Thailand).
This is just part of the global things to take into consideration, I have not even touched on future other parts like consumer markets, cost of electrification, access to clean water, food security, cost of oil, global warming etc that will take place in 10 - 15 years time.
Anyway unless I see India business ranking go up the charts tremendously I'm skeptical if enough FDI will go in to support the the use of the younger workers. It is a double edged sword because too many young people with nothing to do its not good in the long run.
I appreciated any good comments back and I will keep an open mind on the subject since we are all here to learn, but if you have something please put it down clearly with something to connect the dots with relevant data.
