China’s manufacturing sector has been shaken by Make in India campaign. The news has been broken by the state-run Chinese daily Global Times. The newspaper said on September 20 that Chinese companies might have to move their production to India mainly because of the competition from the Indian companies.
Why worried
The newspaper admitted, “competitive pressure on China’s manufacturing sector from India is perhaps much bigger than China imagined.”
In an article titled ‘China should reduce production costs for manufacturers as competition with India grows, ‘ the paper said, “Beijing needs to worry about job cuts due to shifting of production bases.”
China’s telecom firm Huawei Technologies has already started manufacturing in India and many more Chinese companies are likely to set up their units in India. They will not only bring foreign currency but jobs as well.
The newspaper said, “India’s low labour cost advantage had forced China to make more efforts to maintain its competitive edge in the global manufacturing landscape.”
The media worries go on to indicate that economic competition between India and China has become highly intense of late and the world’s second largest economy isn’t taking it lightly any more.
Suggestion
The Global Times report suggested some ways in which China can reduce production costs for manufacturers to compete with India. It said that Chinese economy should reduce its reliance on real estate and create a favorable investment environment for manufacturers.
As some foreign-backed companies show an increasing interest in India over China, the country should promote the development of its local manufacturers, newspaper added.
“As Chinese manufacturers show an increasing interest in setting up assembly lines in India, the economic competition between the two countries is likely to enter a new stage as India and China vie to expand their industry chains,” Chinese media said.
It is clear indication that India is becoming manufacturing base for world. China cannot afford it and should ensure its competitiveness, Chinese media said. It is very important for Chinese local suppliers to maintain technological advantage through continuous innovation, media added.
Chinese investment in India on the rise
Chinese investments are continuously growing in India. According to Chinese media, Chinese investments in India have been increased 6th time than in 2014 and reaches to 870 Million USD. However, India was not among the 13 countries which received direct investment from China exceeding one billion in 2015.
Media gave as an example of survey of Japan Bank for International Cooperation (JBIC) which ranked India to be the most preferred destination for future investment. In April, 2016 a report said that Small and Medium-sized Enterprises (SMEs) from China are planning to invest $1 billion across various states in sectors ranging from telecommunications to electrical equipment to appliance manufacturing and machinery.
India got better rank
According to a recently published annual report of United Nation; India gained 3 places and vaulted into 6th position in manufacturing sector. China has secured 1st rank followed by USA, Japan, Germany and South Koria.
