India Offers Land Twice Luxembourg's Size To Firms Leaving China: Report

[mmr]

Of course ! Luxemburg is more popular than Comoros with anybody any time. I have been to Luxemburg myself

You always give an analogy with someone/something people can easily identify with.



Not Mexico. It is not easy to relocate a huge industrial plant from China to Mexico. Vietnam and Philippines will benefit most

Mexico too. No tariff and very low transport cost. Not to mention amount of time you save on transportation. And its very easy to fly or drive from usa.

Mexico is very reliable. Usa has full control over them and they have a huge young hard working population.

I been to Mexico. You will be surprised how they benefited from nafta. Most auto makers and heavy industries already have huge presence there. Which will only increase once supply chain redistribute from china. Mexico and usa trade is now 614 billion dollar annually. Which is more then double of all the south east Asian countries combined with usa. And Mexico already replaced china as number one trade partner of usa.

I say potential for Mexico is limitless.

 

[Nilgiri]

Vietnam and Mexico will grab most.

Mexico is already saturated from NAFTA inertia. There is reason why VW in India exports to Mexico big time.

Vietnam is also getting there given its far smaller population compared to India....and far far smaller market cap.

What use is offering a huge plot of land when there is little to no infrastructure on these lands?

That's a big assumption to make.

That includes 115,131 hectares of existing industrial land in states such as Gujarat, Maharashtra, Tamil Nadu and Andhra Pradesh, they said.

Would you like to know some names of companies set up in these areas already?

I say potential for Mexico is limitless.

...yeah drug cartels and all. My friend just other day was nearly kidnapped by one of their roadblocks outside monterrey. Please, you have to study Mexico far more than that before this commentary.

 

[mmr]

Mexico is already saturated from NAFTA inertia. There is reason why VW in India exports to Mexico big time.

Vietnam is also getting there given its far smaller population compared to India....and far far smaller market cap.



That's a big assumption to make.

That includes 115,131 hectares of existing industrial land in states such as Gujarat, Maharashtra, Tamil Nadu and Andhra Pradesh, they said.

Would you like to know some names of companies set up in these areas already?



...yeah drug cartels and all. My friend just other day was nearly kidnapped by one of their roadblocks outside monterrey. Please, you have to study Mexico far more than that before this commentary.

Drug cartels been present in mexico since early 1980's. But if you look at trade between Mexico and USA it keep increasing. The cartels dont mean americans and canadians not flooding mexcio as tourist and to do business.

https://www.forbes.com/sites/kenrob...espite-overall-us-trade-decline/#417a9cc33eab


https://www.cnbc.com/2019/09/12/mexico-may-be-an-unexpected-winner-of-the-us-china-trade-war.html

 

[Nilgiri]

Drug cartels been present in mexico since early 1980's. But if you look at trade between Mexico and USA it keep increasing. The cartels dont mean americans and canadians not flooding mexcio as tourist and to do business.

https://www.forbes.com/sites/kenrob...espite-overall-us-trade-decline/#417a9cc33eab


https://www.cnbc.com/2019/09/12/mexico-may-be-an-unexpected-winner-of-the-us-china-trade-war.html

Again Mexico labour is priced lot more higher than developing Asia...so only some capital will shift there and its already saturated from NAFTA inertia.

Firms leaving China will not just automatically flock there....or Vietnam. It very much depends on what kind of industry it is and what the existing presence in other countries is and what the local liquidity situation is to integrate.

Market cap and fairly priced internal bond/credit market+supply is very important....because it extra funding source (competitive buyers market) once you set up inside (rather than have to do continual brownfield FDI which may bring added costs in transaction and approval time)

You can compare all countries in ease of doing business metrics:

https://www.doingbusiness.org/en/rankings

Then factor in the pricings for different industries along with how much the capital-movement costs are (if we are talking manufacturing).

Some countries simply will not benefit much at all because they refuse to improve on business ease...so any cheap labour they have (at training level needed) is simply priced out from get go...its not even considered in the corporate board meetings of relevance.

....or in say Mexico, Brazil or Turkey case (similar to China) already getting high priced intrinsically....and people start talking about "middle income trap" and stuff because of inability to transition to services and innovation intensity etc.

I don't see India, Vietnam, Indonesia as one of those on either list...but we can always wait and see.

 

[GHALIB]

Mexico too. No tariff and very low transport cost. Not to mention amount of time you save on transportation. And its very easy to fly or drive from usa.

Mexico is very reliable. Usa has full control over them and they have a huge young hard working population.

I been to Mexico. You will be surprised how they benefited from nafta. Most auto makers and heavy industries already have huge presence there. Which will only increase once supply chain redistribute from china. Mexico and usa trade is now 614 billion dollar annually. Which is more then double of all the south east Asian countries combined with usa. And Mexico already replaced china as number one trade partner of usa.

I say potential for Mexico is limitless.

yes that is possible .

 

[Nilgiri]

@mmr

https://www.bloomberg.com/news/arti...re-more-than-1-000-u-s-companies-out-of-china

Gives idea of how existing presence helps to move more (seed---->sapling --->large plant----> tree):

India expects to win over U.S. companies involved in healthcare products and devices, and is in talks with Medtronic Plc and Abbott Laboratories on relocating their units to the country, an official said. Medtronic spokesman Ben Petok and Abbott spokeswoman Darcy Ross didn’t immediately respond to emails seeking comment.

Both Medtronic and Abbott have a presence in India, which may make it easier for them to move their China supply chains to the country, according to an official. They’re based out of financial center Mumbai and already work with large Indian hospital groups.

(Rest of article provides more context, details and challenges)

========

It is often about getting leg in the door early....so you have place at table later.

Thats why BD and others have to improve their ease of doing business as first move to sustainably get the seeds and saplings for 10 - 20 years later (or even longer) to grow lot more when opportunity arrives. It does not come overnight, esp the final tier stuff that provides the most value/wealth to economy.

@Krptonite @BL33D @bluesky @leonblack08 @Jungibaaz @Naofumi @Chak Bamu @VCheng

 

[mmr]

@mmr

https://www.bloomberg.com/news/arti...re-more-than-1-000-u-s-companies-out-of-china

Gives idea of how existing presence helps to move more (seed---->sapling --->large plant----> tree):

India expects to win over U.S. companies involved in healthcare products and devices, and is in talks with Medtronic Plc and Abbott Laboratories on relocating their units to the country, an official said. Medtronic spokesman Ben Petok and Abbott spokeswoman Darcy Ross didn’t immediately respond to emails seeking comment.

Both Medtronic and Abbott have a presence in India, which may make it easier for them to move their China supply chains to the country, according to an official. They’re based out of financial center Mumbai and already work with large Indian hospital groups.

(Rest of article provides more context, details and challenges)

========

It is often about getting leg in the door early....so you have place at table later.

Thats why BD and others have to improve their ease of doing business as first move to sustainably get the seeds and saplings for 10 - 20 years later (or even longer) to grow lot more when opportunity arrives. It does not come overnight, esp the final tier stuff that provides the most value/wealth to economy.

@Krptonite @BL33D @bluesky @leonblack08 @Jungibaaz @Naofumi @Chak Bamu @VCheng

Fully agree. India did good job in terms of ease of doing business. I think benefits will be more visible 10 years from now.

Although i think some manufacturing might move from china to usa instead of other countries. Specifically api...pharmaceutical...medical equipment and life saving items which is almost part of national security. This covet kind of make west really vulnerable to global value chain overly dependent on China and others.

Also what you think future of usa? With so many unemployment? Do you think they are heading towards universal basic income and higher tax? Many ppl now saying most of the lost jobs in the usa wont be back any time soon or maybe never. This might be true for Canada too. Specifically oil sector now going to toilet.

 

[Nilgiri]

Although i think some manufacturing might move from china to usa instead of other countries. Specifically api...pharmaceutical...medical equipment and life saving items which is almost part of national security. This covet kind of make west really vulnerable to global value chain overly dependent on China and others.

Yes it all depends on the specific supply chain and the specific labour/talent pool at hand...not to mention further incentive from learning from this episode to keep some critical supply chains hedged as locally as possible now etc.

Also what you think future of usa? With so many unemployment? Do you think they are heading towards universal basic income and higher tax? Many ppl now saying most of the lost jobs in the usa wont be back any time soon or maybe never. This might be true for Canada too. Specifically oil sector now going to toilet.

Too early to say, lets give it cpl more months, and then tag me in relevant thread for my analysis. Right now we have no idea about what the early ramp/trend of re-liquidisation will look like (for say permeation to small businesses esepcially which provide bulk critical employment in the end and also stop the most ppl from relying on welfare etc)....simply because nothing like this has happened before ever.

Thats where really most the jobs are, they are ones that organic to the country (so very sustianable etc unlike corporate offshoring/supply chain kind of jobs/capital)....but they need liquidity and constantly. They got forcibly shutdown and have been put into cold stasis on top (this is especially bad for large diesel engines in winter similarly, because of warmth inertia needed to start engine reliably).

Its very sad sad situation.....its like putting patient deliberately into heart arrest (to prevent blood from pumping a poison around too much)...then in cold freeze while you do some work to reduce effect of poison....and then at some stage you come to starting heart again and hoping for as good blood circulation as possible...and you simply dont know what will come online in short term and to what degree...what will be same for midterm and longterm (and longterm is really when you will know what has been permanently lost for good).

Its very up into the air, this is never tried before and we dont know simply....we have to learn as we go basically.

 

[leonblack08]

@mmr

https://www.bloomberg.com/news/arti...re-more-than-1-000-u-s-companies-out-of-china

Gives idea of how existing presence helps to move more (seed---->sapling --->large plant----> tree):

India expects to win over U.S. companies involved in healthcare products and devices, and is in talks with Medtronic Plc and Abbott Laboratories on relocating their units to the country, an official said. Medtronic spokesman Ben Petok and Abbott spokeswoman Darcy Ross didn’t immediately respond to emails seeking comment.

Both Medtronic and Abbott have a presence in India, which may make it easier for them to move their China supply chains to the country, according to an official. They’re based out of financial center Mumbai and already work with large Indian hospital groups.

(Rest of article provides more context, details and challenges)

========

It is often about getting leg in the door early....so you have place at table later.

Thats why BD and others have to improve their ease of doing business as first move to sustainably get the seeds and saplings for 10 - 20 years later (or even longer) to grow lot more when opportunity arrives. It does not come overnight, esp the final tier stuff that provides the most value/wealth to economy.

@Krptonite @BL33D @bluesky @leonblack08 @Jungibaaz @Naofumi @Chak Bamu @VCheng

I agree with that. We still rank very low on the ease of doing business. The plan of Special Economic Zones are there to facilitate just that, but I don't know how the execution of the plan is going on. That's where all the corruption and red tape usually slows progress in Bangladesh.

Eventually, companies will move out of China in search of lower cost and higher bottom line. Just like it happened with Japan in the 70s and 80s. Although the COVID 19 situation has led to some companies taking action to move out, I don't think the mass exodus from China will happen in the very short run. At least not until the MNCs have figured out a better alternative in terms of ease of doing business, cost, available infrastructure, and skilled workforce. Countries that are most prepared to facilitate that, are going to be the winners.

 

[Krptonite]

@mmr

https://www.bloomberg.com/news/arti...re-more-than-1-000-u-s-companies-out-of-china

Gives idea of how existing presence helps to move more (seed---->sapling --->large plant----> tree):

India expects to win over U.S. companies involved in healthcare products and devices, and is in talks with Medtronic Plc and Abbott Laboratories on relocating their units to the country, an official said. Medtronic spokesman Ben Petok and Abbott spokeswoman Darcy Ross didn’t immediately respond to emails seeking comment.

Both Medtronic and Abbott have a presence in India, which may make it easier for them to move their China supply chains to the country, according to an official. They’re based out of financial center Mumbai and already work with large Indian hospital groups.

(Rest of article provides more context, details and challenges)

========

It is often about getting leg in the door early....so you have place at table later.

Thats why BD and others have to improve their ease of doing business as first move to sustainably get the seeds and saplings for 10 - 20 years later (or even longer) to grow lot more when opportunity arrives. It does not come overnight, esp the final tier stuff that provides the most value/wealth to economy.

@Krptonite @BL33D @bluesky @leonblack08 @Jungibaaz @Naofumi @Chak Bamu @VCheng

Encouraging news coming in as more states are passing legislation making purchase of land for industrial purposes directly from farmers easier. What usually took 3 years can now be hopefully whittled down to 30 days, solving one of the key hurdles(land acquisition) for further industrialisation.

Although a dedicated watchdog to prevent exploitation ' A La Capitalism ' should be setup in such a way that it doesn't impede this much needed growth.

Yes it all depends on the specific supply chain and the specific labour/talent pool at hand...not to mention further incentive from learning from this episode to keep some critical supply chains hedged as locally as possible now etc.



Too early to say, lets give it cpl more months, and then tag me in relevant thread for my analysis. Right now we have no idea about what the early ramp/trend of re-liquidisation will look like (for say permeation to small businesses esepcially which provide bulk critical employment in the end and also stop the most ppl from relying on welfare etc)....simply because nothing like this has happened before ever.

Thats where really most the jobs are, they are ones that organic to the country (so very sustianable etc unlike corporate offshoring/supply chain kind of jobs/capital)....but they need liquidity and constantly. They got forcibly shutdown and have been put into cold stasis on top (this is especially bad for large diesel engines in winter similarly, because of warmth inertia needed to start engine reliably).

Its very sad sad situation.....its like putting patient deliberately into heart arrest (to prevent blood from pumping a poison around too much)...then in cold freeze while you do some work to reduce effect of poison....and then at some stage you come to starting heart again and hoping for as good blood circulation as possible...and you simply dont know what will come online in short term and to what degree...what will be same for midterm and longterm (and longterm is really when you will know what has been permanently lost for good).

Its very up into the air, this is never tried before and we dont know simply....we have to learn as we go basically.

Valid points, but I'd rather look at the few silver linings, industrial reform is gathering pace, what took years is now taking days. If we come out of this better prepared and oriented towards furture shocks, our overall economic backbone improves as a result.

 

[Aspen]

Land for how long?

Giving free land for 10 years is one thing.
Giving free land for 50 years is another thing.

 

[Nilgiri]

Valid points, but I'd rather look at the few silver linings, industrial reform is gathering pace, what took years is now taking days. If we come out of this better prepared and oriented towards furture shocks, our overall economic backbone improves as a result.

Yes latter reply was oriented towards USA/Canada specifically.....being developed countries. Situation is very different for developing country that is not so far down the beaten path, and has more spring in step.

 

[Krptonite]

Land for how long?

Giving free land for 10 years is one thing.
Giving free land for 50 years is another thing.

It's much more complex than just that, creating an ecosystem takes considerable time and expertise, but the consequent pay off is huge. It creates jobs and acts as an additive for the local economy further birthing dependant ecosystems. Seeding or setting up an industry is very capital intensive, the initial benefits offered by the government are geared towards further value creation.

Land acquisition has always been a bone of contention with investors. You mix that with red tape and slow legislative reform and you get a clearer picture as to why now expedited reforms such as these are needed.

Ofcourse that's not to imply safeguards shouldn't be added in, it should be done in a manner so as to not act as a retardant to growth.

 

[BL33D]

It's much more complex than just that, creating an ecosystem takes considerable time and expertise, but the consequent pay off is huge. It creates jobs and acts as an additive for the local economy further birthing dependant ecosystems. Seeding or setting up an industry is very capital intensive, the initial benefits offered by the government are geared towards further value creation.

Land acquisition has always been a bone of contention with investors. You mix that with red tape and slow legislative reform and you get a clearer picture as to why now expedited reforms such as these are needed.

Ofcourse that's not to imply safeguards shouldn't be added in, it should be done in a manner so as to not act as a retardant to growth.

One great initiative is from Karnataka where businesses can now buy land directly from farmers. Should solve a hella lot of problems.

 

[bluesky]

I have reasons to believe that very few US companies in China will move to other countries including India. They will not even move to Japan where the labor cost is no less than it is in America. Chinese infrastructure is based on sound planning.

The USA companies may possibly move to Vietnam where govt people are docile and cooperative, this country is at the other side of Pacific. India may be too far for them. The US people know Vietnam more than they know India except that Taj Mahal is very famous.

Anyway, this is my personal opinion. No one really should think the US companies will move out from China en mass. For now, it is only Baat Ki Baat.