India Compete With China!

India Compete With China!

  • China product and manufacturing is more cheaper then india. Why?
  • Why China Is “The World’s Factory”
  • How much of the world’s products are made in china.
  • Can India Develop Like China?
  • Innovation Efficiency of China
china mass production

China product and manufacturing is more cheaper then india. Why?

>>First, labor cost in China is not so high as it is in the US. People in China go from villages to big cities in search of work and they don’t ask for much money.

>>Large scale manufacturing. Chinese produce tons of goods every day and due to this, their price is cheaper, even if you order a custom design. Still, everything depends on the minimum order quantity, some manufacturers have MOQ of 10K items or even more. The cost may vary depending on this factor.

>>Routing or raw material. Unlike other countries, China has an incredibly developed infrastructure, so raw material can come from point A to point B in the shortest time and for the minimal price. Chinese plastic manufacturing companies, products factories are still on the top when it comes to transporting material or ready-made products.

In contrast, Indian general public attitude towards industrialization is often poisonous. The bureaucrats are too slow to move, the politicians often careless and the common public think “industrialists” make a lot of profits, who just needs to be taxed high.

It is far harder to start a factory in India and the interest rates are substantially high. Land prices near major cities are through the roof and the infrastructure abysmal. Thus, industrialists are not able to fully tap into India’s lower wages.

Indians often moan about the low rate of innovation in India. We moan that very few things are made in India. To really make in India, the society has to put industrialization at the highest priority. It cannot be seen as lower priority compared to agriculture and other sectors.

Why China Is “The World’s Factory”

The 5 reasons why China is the world’s biggest manufacturer

According to data published by the United Nations Statistics Division, China accounted for 28 percent of global manufacturing output in 2018.

China has been accused of artificially depressing the value of its currency in order to keep the price of its goods lower than those produced by U.S. competitors.

Lower Wages:

China is home to approximately 1.39 billion people, which makes it the most populous country in the world.

The law of supply and demand tells us that since the supply of workers is greater than the demand for low-wage workers, wages stay low. Moreover, the majority of Chinese were rural and lower-middle-class or poor until the late 20th century.

China doesn’t follow (not strictly at least) laws related to child labor or minimum wages, which are more widely observed in the West.3

However, this situation seems to be changing and more provinces report they have increased their minimum wages in response to increases in the cost of living.

Business Ecosystem:

Industrial production does not take place in isolation, but rather relies on networks of suppliers, component manufacturers, distributors, government agencies, and customers who are all involved in the process of production through competition and cooperation. The business ecosystem in China has evolved quite a lot in the last 30 years.

For example, Shenzhen, a city bordering Hong Kong in the southeast, has evolved as a hub for the electronics industry. It has cultivated an ecosystem to support the manufacturing supply chain, including component manufacturers, low-cost workers, a technical workforce, assembly suppliers, and customers.

Lower Compliance:

Manufacturers in the West are expected to comply with certain basic guidelines with regards to child labor, involuntary labor, health and safety norms, wage laws, and protection of the environment. 

Historically, Chinese factories have employed child labor, have had long shift hours, and have not provided the workers with compensation insurance.3 Some factories even have policies where the workers are paid once a year, a strategy to keep them from quitting before the year is out.

Taxes and Duties:

The export tax rebate policy was initiated in 1985 by China as a way to boost the competitiveness of its exports by abolishing double taxation on exported goods. Exported goods were subject to zero percent value-added tax (VAT), meaning they enjoyed a VAT exemption or rebate policy.

Additionally, consumer products from China were exempted from any import taxes. These lower tax rates helped to keep the cost of production low, enabling the country to attract investors and companies looking to produce low-cost goods.


China has been accused of artificially depressing the value of the yuan to provide an edge for its exports against similar goods produced by U.S. competitors. China keeps a check on the appreciation of yuan by buying dollars and selling yuan. The yuan was estimated to be undervalued by 30% against the dollar in late 2005. In 2017, the yuan appreciated 8% against the dollar, a move that experts say came about after President Trump threatened to label China a currency manipulator.

How much of the world’s products are made in china.

Most of the raw materials for products that are cheaper when made in China, are readily available in China at a very good price quality index. Public infrastructure in China is just super. Goods can be transported efficiently, on-time and across country.

BY MAKING things and selling them to foreigners, China has transformed itself—and the world economy with it. In 1990 it produced less than 3% of global manufacturing output by value; its share now is nearly a quarter. China produces about 80% of the world’s air-conditioners, 70% of its mobile phones and 60% of its shoes. The white heat of China’s ascent has forged supply chains that reach deep into South-East Asia. This “Factory Asia” now makes almost half the world’s goods.

China has been following in the footsteps of Asian tigers such as South Korea and Taiwan. Many assumed that, in due course, the baton would pass to other parts of the world, enabling them in their turn to manufacture their way to prosperity China’s trade with the rest of the world is more balanced. When excluding trade with the US and Hong Kong, China exported $1.71 trillion and imported $1.97 trillion in goods in 2018. Use the tool below to explore China’s trade surplus with key partners besides the US and Hong Kong. The interactive can also be used to explore the economies with which China has a trade deficit, such as South Korea. The “customize” option allows users to compare up to nine trading partners of interest.

It is also important to consider the value of China’s trade in services. As China’s economy has matured, the demand for services has grown. Between 2000 and 2017, the value of services imported by China grew from $36 billion to $470 billion.

Much of these services come from advanced economies. In 2017, China’s trade in services with the US totaled $75 billion, which makes up between 10-12 percent of total trade between the two economic powerhouses. In contrast to their trade in goods, trade in services tips heavily in favor of the US. China imported $57.6 billion in services from the US in 2017 while it exported only $17.4 billion to the US.

Hong Kong and the European Union are also major services providers. Services imports from Hong Kong hit $39.6 billion in 2017. China imported $42.9 billion in services from the EU in 2016. 

Can India Develop Like China?

Indian development story can stop in the face of the fourth industrial revolution or as young population supply starts to fall. The entire third world growth following internal consumption led development is actually a derivative of Chinese development. Indian growth is not enough to even out Chinese growth moderation.

India’s manufacturing labor is more competitive when compared to China. In 2014, the average cost of manufacturing labor per hour was $. 92 in India and $3.52 in China. … Low power availability can be a major drawback manufacturing in India.

People in India to say “why India is not manufacturing” :

a. political issues-

b. Corruption

c. Indian Mentality ( inferior complex)

d. Lack of innovation

e. Indian Education system

There are numerous reasons why India lags behind the world with respect to manufacturing and they don’t require an expert to enumerate. Let me attempt to point out a few that come to my mind natively.

1. Antiquated labour laws. Set in the year 1923 in the pre-independence era, not much has changed even today. A law That makes it tough for the employer to seek avenues and liberty to employ re-employ modify his labour force as per his choice.

2. Arbitrary powers to the factory license inspector, local administration such as the Municipality etc make it one of the most corrupt bureaucratic systems in the world. Naturally all this adds up to the cost of production and finally burdening the customer.

3. For export oriented units, unlike China there are no incentives given to producers like concessions power, water, rentals, labour or specific duty drawback schemes.

4. Speed to get clearances for setting up a company in China .. Ask any European or US based MNC and they’d tell you what this aspect means to them.

5. Concerted effort by all government bodies to help create a large ecosystem consisting of producers suppliers manufacturers bankers and traders .. All with a single minded objective or goal to facilitate trade commerce exports and a vibrant industry .. That kind of attitude and determination is missing from bureaucracy and the Government.

6. Seamless infrastructure .. like that of China. Ask the exporter and he’d tell you at least one harrowing story of how he gets crucified at the ports followed by the harassment at the hands of the customs officials.

7. Infrastructure .. roads rails ports air and most important the procedural system for clearances.

8. Clarity and speed of operating systems w.r.t local body taxes and duty drawbacks from the Government.

9. Rationalisation and simplification of filing for taxes and compliance related documentation .. needs no further elaboration.

10. Strong IP Laws that keep pace with the current spade of developments in the realm of medicine IT Software and mechanical electronic and electrical technology development. Especially true if the creator is based out of India and desires to market to the world.

11. The judicial system of the nation. And the time taken for the expedition of the case. This one needs no further elaboration.

There could be many more. I trust these sum up most of the qualms that matter to any entrepreneur desiring to do manufacturing in India.

Innovation Efficiency of China

Technological innovation is an important engine to support the development of China from a big manufacturing country to a powerful manufacturing country. With the support of government policies, China’s high-end manufacturing industry urgently needs to solve the problems of insufficient technological innovation and weak core competitiveness. This paper uses the super-SBM model to measure the impact of incentive policies related to high-end manufacturing industry on innovation efficiency of China’s high-end manufacturing industry in 2012–2017. 

Since 2010, China has issued a series of relevant industrial policies to support the transformation and development of manufacturing industry, putting forward the idea of “promoting traditional industries to move towards the middle and high-end,” emphasizing the development of “high-end manufacturing areas,” and enhancing technological innovation capabilities. 

China’s manufacturing industry to the middle and high-end levels of global value chain. Premier Li Keqiang calls for adherence to the basic principles of “innovation-driven, quality first, green development, structural optimization, and talent-based.” Therefore, improving the independent innovation capability (refers to the process of realizing the value of new products through the unique core technology of independent intellectual property rights and on this basis) of high-end manufacturing industry is an important driving factor for China to become a manufacturing power.

The main research contributions of this paper are to provide optimization strategy and policy recommendations of innovation efficiency of high-end manufacturing industry.

Research on Industrial Upgrading of Manufacturing Industry under Industrial Policy .

Research on Innovation Efficiency of High-End Manufacturing Industry

Materials and Methods

China’s Policies on High-End Manufacturing

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