Let's Manufacture

As 2008 arrives, it is time for India to once again consider its position
vis-a-vis China, the big economy that everybody will be watching. And it starts
with manufacturing.

One big difference in the strategy between India and China is that India is
going after one part and China is going after the whole.

China has taken an interesting approach for global dominance. China thinks
that manufacturing is the last, most vital, and the culminating point in the
lifecycle of any product. If manufacturing can be controlled, you can control
product design, outsourcing, and manufacturing costs on the pre-production side,
and pricing and distribution on the post-production side. Effectively, if

China gets control over manufacturing, it will have control over everything.

For instance, one of the world's biggest mobile phone company has got a huge
manufacturing base in China. Because of this, lots of ancillary units, which
provide handset components, are also getting set-up. This mobile phone company
is now seriously looking at getting design and development work done from the
Chinese, because this country is also getting stronger in embedded software
skills. Since China is a huge market in itself, this comes as a deadly
combination-design, outsource, manufacture, sell-all in the same place. In the
case of India, it would be just design, and then we get out of the loop.

Ibrahim Ahmad

The Chinese USP will thus be-good design skills, reliable and cost effective
outsourcing options, global manufacturing strengths, huge home market, and so
on. India will just have software designing and after that, BPO to offer. And
the way China is now encouraging and promoting education-specially of English
language and engineering skills-their grip over the entire design to manufacture
to support cycle will only get stronger. And India may be reduced from the
position of producer to consumer.

Those of us who believe that BPO will be our answer to China, should remember
that the world is moving BPO to India because of low costs and English language
skills. However, China as a destination offers not just lower costs, but
stability, fast growing domestic market, unlimited government support, big
investments in education and infrastructure. That is long term planning, and the
Indian IT industry and the government need to think on these lines.

ibrahim ahmad

ibrahima@cybermedia.co.in