In the light of Coronavirus, after Japan announced a $2.2 billion package for its companies located in China to relocate to Japan or Southeast Asian nation, South Korean steel giants Hyundai Steel and POSCO are likely to shift their manufacturing base to India from China. As many as 1,000 manufacturers are in talks with Indian authorities to establish manufacturing in India. Complete Coverage: Coronavirus
Crux of the Matter
Retribution Or Safety? As Coronavirus persists, many companies are mulling over reducing their dependency on China. Recently, Japan offered a $2.2 billion package to its firms located in China to relocate to Japan or Southeast Asia. South Korean steel giants Hyundai Steel and POSCO are in talks with Indian authorities over shifting to India from China. As many as 1000 firms are in talks with the Indian authorities to shift manufacturing to India. Companies seem to be looking to diversify manufacturing to share risks in case of an event like Coronavirus. Companies in electronics, mobiles, synthetic fabric, textiles, medical devices sectors are thinking of moving to India.
India's phone exports more than double- local production has been increasing with sops for local manufacturing encouraging the likes of Apple,Xiaomi,Oppo,Vivo, OnePlus,Realme & Samsung to scale up/expand local manufacturing in India🇮🇳@makeinindia https://t.co/wjHOIhal2F — Gurleen Kaur (@gurleenmalik) April 16, 2020
Is India Ready? India seems to be a preferred destination because setting up and running manufacturing would cost these companies 10-12% less than other Southeast Asia nations. India even reduced its corporate tax rate to 25.17% last year. What is more incentivizing is the applicable tax rate to new manufacturers. It is 17% – the lowest in Southeast Asia. Foreign Direct Investment in India also growing steadily since last 5 years.
Unlike countries like Vietnam, India has a huge domestic market which can be catered by manufacturers. Apple began manufacturing iPhones at India’s Chennai plant owned by Chinese company Foxconn last year. Another iPhone manufacturer Wistron which is listed in Taipei is mulling over shifting production to India.
Curiopedia
The largest assembler of Apple Inc.’s devices was China until the announcement by Foxconn technology group chairman Terry Gou was made about Foxconn India handling the production of iPhones shortly. India is now the fastest-growing smartphone market in the world.
China’s Tencent Holdings Ltd. is one of the world’s largest social media companies, video game companies, venture capital firms, and one of the world’s most valuable companies. It is the first Asian company to cross the $500 billion valuation mark. As of 2018, Tencent had the 5th highest global brand value.
In 1952, 83% of the Chinese workforce was employed in agriculture. By 2012, the fraction of the workforce employed in agriculture had fallen to about 33% due to the industrialisation of China between the years 1960-90 and rapid population growth simultaneously.
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