Product manufacturing: China vs. India

Can I assume that a decent supply chain will develop in India?
How did China develop a supply chain and is India likely to follow the same path?

The above questions are on the minds of many executives these days. The lack of a robust supply chain in India seems to be a chicken and egg issue. Meanwhile, it appears a supply chain won't develop until there's enough demand for components from manufacturers.

It's inevitable India will one day have an adequate technology supply chain infrastructure that will meet the needs of the day and be able to adapt and evolve as market forces dictate. As in most free markets, market demands will push innovation and improve efficiency while isolating and driving out inefficiencies.

Meanwhile, a connection exists between India's domestic demand for technology products and the development and integrity of India's domestic technology supply chain distribution systems.

India manufacturing

As India's domestic consumption of technology products increases, demand will increase for creating and sustaining adequate and reliable supply vendors; routes, and distribution-related systems. It is then believed that true momentum will surface in India that drives supply chain evolution and the bar in India will be raised.

However, it is not until India's domestic demand for electronics products increases significantly will drivers for creating such an infrastructure come from 'within' India. Whereas, currently, demand placed on the system comes from MNCs doing business with India as a source for their manufacturing followed by export to other regions of the globe for end-market consumption.

Lack of good, physical infrastructure in India such as roadways; sea and airports, effective layout of city and regional functions, and reliable energy sources all contribute to the missing underlying foundation required to support the general framework from which a good Indian supply chain can begin to develop and thrive.

It does no executive any good to have printed circuit boards or finished goods inventory in an Indian factory and be unable to reliably move inventory to, and beyond, air or seaport in a timely and efficient manner.

China and productivity

Economically, China, although a communist country, its people are some of the best capitalists on the planet with an old history of ships carrying one thousand men engaged in trading with far away ports. Add to this, there is a true sense of loyalty among overseas Chinese to their homeland - helping support and build businesses on the mainland with money earned from overseas investments and ventures.

The Chinese are well-known business men. Even though they are a small minority in their adopted countries, the Chinese seem to control a disproportionate share of these countries' national trade. In Ming-Jer Chen's book, Inside Chinese Business - A Guide for Managers Worldwide, Chen notes in Indonesia, for example, where the Chinese population is 4 percent of the country's total, it controls 70 percent of the trade. In the Philippines, where the Chinese population is 3 percent, it also manages to control 70 percent of all business. Thailand's population is 3 percent Chinese, and yet the Chinese control 60 percent of the trade.

    

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