Big international brands decided to shift their base from China to elsewhere. Many are opting for India.
Even before China drew negative publicity because of the coronavirus, the country had started feeling the heat of global ire. United States president Donald Trump was already waging a trade war by setting tariffs and barriers on China. Countries that supported America were already under unofficial pressure to isolate China from their trade treaties.
Within weeks of the virus spreading to different quarters of the world, world leaders started blaming China for not being able to prevent the initial virus outbreak from becoming a pandemic. Most of them started pulling their companies out of the Land of the Dragon. Several global giant have shut down or significantly cut short their operations in the country. And China’s loss became India’s gain. Disgruntled firms wowed to shift their base to the neighboring countries. In September, as many as 24 companies planned to shift their production from China to India. It is the kind of opportunity PM Narendra Modi’s Make In India mission has been waiting for.
Make In India: Here are the sectors that are benefitting from the Corporate Exodus from China in virus aftermath.
1) Smartphones And Electronics
Assembly partners of giant electronics players such as Samsung and Apple have shown keen interest in moving from China to India. These giant firms have pledged investments of up to $1.5 billion to establish their mobile-phone factories in different parts of India. Apple has already started making its flagship iPhone 11 at the Foxconn plant near Chennai. The company has also started assembling its iPhone SE 2 in Kolar, Karnataka. Foxconn is also planning to invest up to $1 billion in India. Last month, a report said that the Japanese government would offer subsidies worth Rs1,618 crore to the local manufacturers who want to shift their units from China to India and Bangladesh. This subsidy was mainly for electronic equipment.
Assembly partners of giant electronics players such as Samsung and Apple have shown keen interest in moving from China to India.
2) Pharmaceutical Industry
Even before the nationwide lockdown was announced in March, some pharma companies saw a surge in their orders from companies who used to purchase drugs from China. Orders for an essential ingredient in painkiller, Ibuprofen had surged 25% since February. She said that there had been a lot of interest from companies seeking to shift their supply base. Sharvil Patel, managing director of drugmaker Zydus Cadila, had said in April that his company was working to manufacture more ingredients after a spike in prices of Chinese products.
3) Apparel Industry
German leisurewear brand Marc O’Polo and Carter’s — one of the world’s largest babywear brands, has also asked Indian companies to start making apparel and fabrics. Marc O’Polo has reportedly asked the Indian vendor Warsaw International to prepare jerseys. Earlier, the same German company got these jerseys manufactured at a Chinese firm. Carter, on the other hand, has asked Tamil Nadu-based SP Apparels to work on developing a new fabric. Recently, rating agency ICRA also said that the US’ decision to restrict textile imports from Xinjiang, China, will likely help India’s textile exporters.
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4) Footwear Industry
Some of the top international footwear companies have also decided to shut their manufacturing units in China and shift them to India. In May, German footwear brand Von Wellex announced a shift in its operations from China to Agra. Casa Everz Gmbh decided to make this move on the invitation of Uttar Pradesh chief minister Yogi Adityanath. The company is bringing an estimated investment of Rs 110 crore to the state. Von Wellex used to produce more than 3 million shoes annually in China.
5) Automobile Components
China is a big market for auto components. But after the coronavirus halted production and auto component companies faced disruptions, many of them inquired about companies working in India. During the lockdown in April, auto parts makers had received many enquiries from companies who had operations in China, but they wanted to de-risk their supply chain. Manufacturing firms looking to move to India are assessing and looking for more favorable policies from the Narendra Modi government.
Amid coronavirus, many automobile component companies have inquired about investing in in India.
Other Destinations In The Fray
Companies moving out from China also have options like Vietnam, Myanmar, Bangladesh and a chain of African nations to set up their companies, but India can beat them competitively to woo investors and emerge as the top choice. There are a number of prominent sectors and companies leaving China to set up their establishments in India.
Watch: Pandemic Opportunity for India
The sentimental detachment of the world from China has opened the door for the Indian business community to host companies who are looking for a new base after shutting shops in China. The country should embrace the opportunities and benefits.