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India's growth in manufacturing sector worries Chinese media

Officials in Beijing, adept at keeping their words vague, may not always admit to competition from India in the manufacturing sector, but the Chinese media has begun to take note of a shift in momentum.

BT Online        Last Updated: September 20, 2016  | 17:59 IST
India's growth in manufacturing sector worries Chinese media
Photo: Reuters

Officials in Beijing, adept at keeping their words vague, may not always admit to competition from India in the manufacturing sector, but the Chinese media has begun to take note of a shift in momentum.

An article in the country's mouthpiece, the Global Times newspaper, has admitted to the competition the country faces from India and the urgent need to take necessary steps to stay ahead.

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"The increasing competition from India raises a tough question for China's manufacturing sector of how to keep its competitive edge at a time when the nation's labor cost advantage is shrinking rapidly," the paper's reporter Hu Weijia wrote in the article.

The concern expressed in the article comes a couple of days after Indian media reports suggested Chinese telecom equipment company Huawei will start manufacturing smartphones in India by September-end.

The Shenzhen-based company's will be partnering with electronics manufacturer Flextronics to produce the smartphones in India, reports said. A formal announcement is yet to be made.

India is fast becoming a favourite for Chinese smartphone makers due to a slowdown in economy back home, and the Chinese media seem to be keeping a track of the changing fortune.

"India is one of the few spots still buzzing with high growth in the global smartphone landscape, and has thereby increasingly become a magnet for smartphone makers from its giant northeastern neighbor, China, where the market for smartphones has now hit a plateau after years of explosive growth," another article published in the Global Times earlier this month said.

The latest article also noted: "China's low-end manufacturing industry is experiencing hard times as some multinationals move production from China to other Asian countries, India included".

Chinese smartphone makers Vivo, Oppo, LeEco and Gionee are some of the new entrants in the Indian market. These firms are giving a tough time to competitors in India such as Micromax, Intex, Lava and Karbonn Mobiles, but the media in Beijing seem to suggest it may not necessarily be a good sign.

"India's low labor cost advantage has rung an alarm for China's manufacturing sector. Now it is time for China to map out concrete measures to reduce production costs for manufacturers," the article in the Global Times said.

It also expressed concern about foreign brands being more interested in India.

"Additionally, as some foreign-backed companies show an increasing interest in India over China, the country should promote the development of its local manufacturers and encourage them to build plants in less-developed central and western regions where labor costs are relatively lower," it said.

But the article finished off by saying "despite India being more attractive to manufacturers than ever, it will be difficult for the country to build a complete industrial chain overnight".

 

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