*Why China and not India?*<\/p>\n
International Business: Why didn’t American companies choose India instead of China for manufacturing products?<\/p>\n
– Haosen Cai, Engineer<\/p>\n
I\u2019ve come across similar questions from time to time on this very topic and I don\u2019t recall anyone ever pointing out the true reason.<\/p>\n
The reason as to why India can\u2019t outperform China in manufacturing is NOT because of infrastructure, it\u2019s NOT because of skilled labors, it\u2019s NOT because of corruption, and it\u2019s also NOT because of \u201csuperiority of the Chinese mentality\u201d.<\/p>\n
I\u2019d like to answer this question with this noun<\/p>\n
Unpredictability<\/p>\n
Now repeat after me.<\/p>\n
Unpredictability<\/p>\n
Unpredictability<\/p>\n
Unpredictability<\/p>\n
This is the single most powerful noun that\u2019s preventing India from being a manufacturing hub – because doing business in India is so god damn unpredictable, therefore it is impossible to calculate your return on investment when dealing with India.<\/p>\n
Bad infrastructure? No problem, that can be factored into shipping cost & delivery time<\/p>\n
Lack of experienced labors? No problem, that\u2019ll factor into capital\/startup cost<\/p>\n
Corruption? No problem, tell me who I need to pay and how much, that\u2019ll become part of operating cost<\/p>\n
Lots of paper work? No problem, longer startup time means lower return on investment, but that again, can be calculated, and can be made up with higher profit margin.<\/p>\n
You know what the problem with India is?<\/p>\n
NOTHING CAN BE CALCULATED<\/p>\n
In India:<\/p>\n
When someone says \u201cyes\u201d, you have no idea whether he\/she actually meant yes or no.<\/p>\n
When a worker say that \u201cI\u2019ll be there in 5 minutes\u201d, you have no idea whether he\u2019s one of those workers who keeps his word, or he\u2019s one of those workers who\u2019ll just show up 4 hours later<\/p>\n
When an official approaches you and ask for \u201cexpedition fee\u201d, you have no idea how much he\u2019s asking, and how much faster he can expedite, and how many more like him are coming<\/p>\n
When you are presented with a pile of paperwork, you have no idea whether this is the last pile, or whether there are 20 more piles that\u2019s coming after, and whether you were even given the correct paper works to fill out.<\/p>\n
Heck, even if you have someone coming in to help, you have no idea whether he\u2019ll hit a cow on the way here and then forced to wait for another 8 hours for a shaman to show up and complete the ritual.<\/p>\n
All that plus the occasional \u201cI refuse to work with people from that caste\u201d plus union strike and power outages makes doing business in India extremely unpredictable.<\/p>\n
If you are a business owner, would you buy from someone who sells you the same item with $3, knowing that the goods will likely be delivered on time and to specification, or are you going to buy from someone who sells you for $2, but you have no idea when, or even if you\u2019ll get that item?<\/p>\n
Most people would buy it for $3, then just markup the profit.<\/p>\n
Business is all about predictability, trying to make money without ability to predict is called gamble, and business owner don\u2019t like to gamble when they could avoid it.<\/p>\n
So to wrap this up.<\/p>\n
Unpredictability is what\u2019s killing manufacturing in India. Not infrastructure, not mentality, not corruption, not skilled labor.<\/p>\n
It\u2019s UNPREDICTABILITY, in capitalized bold letters.<\/p>\n","protected":false},"excerpt":{"rendered":"
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