MSG Team's other articles

12493 BPO and the Transformation of Process Work

In previous articles in this module, we have discussed how the BPO sector has evolved and some future directions for BPO companies in Asia. This article looks at a little known aspect of the BPO phenomenon i.e. the fact that the very nature of the process work has been transformed because of the emergence of […]

12616 The Capability Maturity Models and their Usefulness for Organizations

Capability Maturity Models When organizations want to be certified for their quality or operational excellence, they usually turn to quality frameworks like Six Sigma, Kaizen, or TQM. These are just representative of the different quality and operational excellence models and there are many other frameworks as well. Similarly, there are process capability models like the […]

12960 Crackdown on Indian Credit Rating Firms

Credit rating industries are part of a closely held industry. For years, this has worked in favor of these agencies since they have to face less competition. However, these agencies are also the first ones to get blamed after every financial crisis. It is a known fact that no one can really predict a market […]

9054 Economic Impact of the Failed Coup in Turkey

In 2016, Turkey faced an attempted military coup. The coup was supposedly orchestrated by a US citizen of Turkish origin. His name is Fethullah Gulen. Apparently, the coup did not go as planned and President Erdogan was able to come out victorious. However, this attempted coup has made him paranoid. This has led him to […]

13007 Executive Pay: The Curious Case of Carlos Ghosn’s Arrest

Carlos Ghosn is a 64-year-old French citizen who is the head of three major automobile companies viz. Mitsubishi, Nissan as well as Renault. To people who are familiar with the automobile industry, Carlos Ghosn is not a name that needs any introduction. He is the wonder executive who has rescued automotive firms from the brink […]

Search with tags

  • No tags available.

How, China Known as the Factory of the World Is Losing Its Seen Due To the China plus Strategy

China is known as the “factory of the world”. This is because it is the world leader in hosting manufacturing plants of Western multinationals, who have moved their offshore production facilities since the 1970s there, attracted in part by the availability of abundant labor, lower wages boosting their profits, and the overall high quality work that the Chinese people are known for.

Indeed, China’s economy has grown leaps and bounds over the last four to five decades, since it opened up to trade and embraced globalization in the late 1970s. This has made the Chinese economy the second largest in the world and has resulted in massive industrialization and urbanization of its cities and semi urban areas, in addition to raising living standards of its people.

However, since the pandemic struck the mainland (aided by the fact that the Corona virus emerged there in Wuhan), its reputation as a reliable and efficient warehouse of the world has taken a major beating, with the consequence that many Western firms are now actively “looking beyond” China, which is what the China Plus strategy is all about.

What is Driving the China plus Strategy, and Why Apple’s Pioneering Move Can Be the Spark?

Essentially the China Plus strategy is a conscious move by Western firms such as Apple to move parts of their global supply chains away from China and into other emerging markets such as India and Vietnam. Indeed, this “reconfiguring” of their global supply and value chains means that these firms are setting up manufacturing facilities in other countries to ensure “de-risking” in case there is another disruption to their production and shipments from China.

For instance, Apple has moved nearly half of its iPhone manufacturing plants to India and Vietnam in the last one year or so, thereby ensuring that any dislocations in its Chinese facilities do not affect the sales of its iconic products back home in the United States. Though Covid and its subsequent “clogging” of supply chains was the catalyst, there have been other concerns as well, mainly to do with increasing instances of labor unrest as the Chinese people are angry and disenchanted with their government and its policies, thereby stoking unrest and strife.

In addition, the “botched” Zero Covid Lockdowns have been the “last straw” for Apple and other firms, who no longer view China as they did over time, leading to China Plus strategy.

How Xi’s Losses Can Become Modi’s Gains and Become a Game Changer for the Indian Economy

The China Plus strategy can indeed become a game changer for the Indian Economy as we have been “struggling” to entice global firms to setup their manufacturing bases here, ever since we liberalized our economy in the 1990s.

Indeed, Covid and China’s other “problems” have come as a boon to India, reeling under its “shrinking” manufacturing sector, which is a job creator, more than its much vaunted services sector. Therefore, if India does play its cards well, the China Plus strategy can boost its exports, create jobs for its Millions of youth, and above all, establish it as a reliable partner in global supply chains.

Moreover, the Indian Economy can benefit as more and more Western firms adopt the China Plus strategy, and in conjunction with the Modi government’s Atmanirbhar policy, can actualize a Double Gain result, as both our exports and Make In India benefit at the same time.

In addition, given India’s rising stature on the world stage, the China Plus strategy can boost our standing and announce to the world that India can and does have the potential, intent, and capabilities to emerge as a serious competitor to China. Indeed, Xi’s losses can well be Modi’s gains.

Never Let A Good Crisis Go Waste! Challenges for Indian Firms and Strategies to Overcome Them

Having said that, one must not start celebrating prematurely as there are several challenges that India has to overcome before the China Plus strategy brings gains to the Indian Economy.

China, over the years has become the world’s factory, due to its disciplined and precision targeted approach, where efficiency and productivity of its workforce and a congenial atmosphere for Western firms became the hallmarks of its success. While India does have these capacities, concerns over periodic social unrest and civil disorder can set it back and lose out to other countries such as Vietnam.

Already the Indian Economy faces serious competition in many sectors from Bangladesh and Vietnam, as well as other emerging markets and so, we just cannot afford to let this opportunity to slip by.

Moreover, we need to ensure political stability, good governance, especially at the civic level, and above all, maintain world standards in production quality and human resources. For this to happen, several converging challenges have to be dealt with in the realms of education, health, and governance. In addition, we can reap the benefits of the China Plus strategy by enhancing our soft power appeal by aggressively marketing and trumpeting our advantages over China.

The Indian Economy Can Benefit From Near Shoring and Friend Shoring As Well

Last, in a world of ever shifting currents and countercurrents, the China Plus strategy should be seen as one among other such moves by Western firms, as Near Shoring and Friend Shoring become the norm. The former pertains to outsourcing to nearby locations and the latter to friendly nations that can guarantee geopolitical stability.

With the Chinese falling out of favor with the West and India steadily becoming a valuable and valued partner, this is the time for us to seize the opportunities. For this to happen, Indian firms must up their game and complement and synergize with the government.

Article Written by

MSG Team

An insightful writer passionate about sharing expertise, trends, and tips, dedicated to inspiring and informing readers through engaging and thoughtful content.

Leave a reply

Your email address will not be published. Required fields are marked *

Related Articles