> Apple was effectively forced into setting up domestic manufacturing in order to launch Indian retail stores, as India laws state that companies wanting a retail presence must source at least 30% of their goods locally.
In comparison to China, it doesn't seem India offers significant incentives to setup manufacturing except tapping into a huge market. What India has started doing right in last few years, China has been doing for more than two decades with no signs of slowing down. If you need a hint about the scale of China's manufacturing capabilities, you should read about the Fidget Spinner Gold Rush [1]. Production literally shot up overnight to cope up with the burgeoning demand. It's impossible to imagine this ever happening in India.
Oh, I'm sure its profitable, but nobody who has bought a fake charger on Amazon has demanded it. The amazing manufacturing and logistics capability is perfect for scammers.
It's a bit silly to assume that demand is the only driver. At some point, people can only buy what's supplied. If 99% of the stuff available is cheap junk and I don't have time to sort through that, likely I'll buying that cheap junk (or nothing at all).
One example is if a high quality item is no longer produced because the company or division selling it goes out of business as it's priced out of the market.
Supply-side domination/flooding can and does impact buying habits.
Given that half the complaints I hear about Amazon are cheaply produced counterfeit goods sold at full price, I wouldn't be so quick to blame all of their failings on consumer demand.
So many people on Amazon buys those junk in the first place. If US consumers did not have a demand for cheap products, those products wont be sold in the first place. So blame the consumers than the manufacturers.
How many articles have we had on HN describing the deceptive practices of people / companies building junk products trying to pass them off as a brand name? I find it difficult to blame people who have been deceived.
Jagadish Bhagwati of Columbia has a ton to say about how India screwed up on trade. Basically there are many trade-unfriendly laws dating back to 60s and 70s which are hard and slow to undo because they have to be done via parliamentary procedures (kinda how Congressional gridlock makes lawmaking slow in the US). Here's a good interview of his with Russ Roberts on Econtalk: http://www.econtalk.org/archives/2013/08/bhagwati_on_ind.htm...
Edit: this is in contrast to China where laws are made by diktats.
Diktats implies the popular consent of the people isn't taken into the consideration by the CCP when forming policy. This is a very western-liberal-repulic centric view point and is flawed. The CCP actively considers _what_ is wanted and _how_ to achieve it. Simply because people do not vote doesn't mean they aren't considered.
India missed the boat on manufacturing but did good on service industry because the government did not have a way to control the flow of information. We say this in India - we flourish in spite of our government. While attitudes have changed (with both major national parties), protectionism still runs rampant for fear of losing their voter base.
All said and done, there is hope that these restrictions combined with incentives could potentially kick start manufacturing in India - at least to the extent of sustaining domestic demand.
> it doesn't seem India offers significant incentives to setup manufacturing..
It might change once local industry warms up attracting the supply chain.. also local software companies/developers will respond to the stimulus.. India has all ingredients to create a great ecosystem.
Great news overall. The more diversified the manufacturing base is, the better it is for supply management. I was surprised to learn how concentrated disk manufacturing was when floods in Thailand disrupted global disk market overnight.
Actually this is the perfect example of why protectionism doesn't work.
Manufacturing is such an iconic aspect of the economy that every government or policy maker loves to talk about it and show progress in it. India has unnecessary incentives put in place for manufacturing and Apple is taking advantage of it. But overall it's a bad deal for India.
I'm not seeing how this is a bad deal for India. India get's more factories setting up shop there to produce products; more jobs, more money staying in the country.
If it's not sustainable for their economy those companies will pick up and move once the market demands higher wages and better worker protections (or just can't afford the subsidies anymore).
The clothing industry does this all the time — they'll build up a local economy until it's too expensive, and then move on to the next desperate area.
If you're trying to be appealing to industry by racing to the bottom you're essentially fighting an extended battle for last place.
But protectionism doesn't have to be "a battle for last place". It often is, I agree, but is also one of the levers used by Korea (etc.) to develop. The book which changed my mind about this, which I highly recommend, is Joe Studwell, "How Asia Works", https://howasiaworks.wordpress.com .
India, unfortunately, has a long record of getting this exactly wrong.
> they'll build up a local economy until it's too expensive, and then move on to the next desperate area.
Wait, uh, why is this a bad thing? Isn't that what we want, to build up a local economy, to build up local capital which if the local populace invests wisely would allow their labor force to be eligible for more skilled jobs etc.
So, the industry will move back because collapsed economy has driven down costs?
I think more likely is that more complex manufacturing will come in as infrastructure and skill set is more in place. Also improved economy leads to better education, supporting service industry.
Clothing industry may have left India and China, but both are better off now.
I'm not talking theoretical, this has actually happened. The industry moved out of Southern China shifting some communities back to the poverty they were climbing out of.
Where did the factories go? Bangladesh, where workers cost less and are abused more.
And if they choose to move out they lose access to the Indian market because they no longer qualify to have stores in India anymore, the 1 billion+ population of the country finds a more attractive local option.
benefit' in this concept, is typically defined solely in terms of net short term financial impact to the parties involved
things like self sufficiency, long-term strategic growth planning, etc. are not factored in.
also:
labor costs are huge in these scenarios.. if indian factory workers were paid what US auto workers are/were paid, I doubt apple would be taking the same strategy.
same could be said for indian mfg in general and also china..
>but China and now this feel like counterexamples.
You don't need to make 30% of something to sell it Chinese retail stores, so I don't think the two are comparable. India also has strict employment laws where once a company reaches a trivial size, it is illegal to fire anyone. The firing is then done by via government petition and you better have an airtight case to do so. So a lot of companies don't scale past x employees to avoid all the added regulation that would hurt them. That's a brake on their economy.
China is almost the opposite of this. They have so few rules and regulations that western product manufacturing moved there to enjoy the low prices. This had a trickle down effect locally. All those jobs and cheap stuff meant that they could ride the coattails of these behemoth Western economies looking for the lowest cost of manufacture. Then the Chinese slowly turned that momentum into their own manufacturing with their own brands and added token protectionism at best to keep the Westerners at arm length, but not enough to chase them away like Brazil and India do with their strict protectionism.
These two countries couldn't be more different. China has a $11T GDP while India has merely has $2T, even with similar populaions. China has literally 5x the economy India has due to market liberalization, low regulations, and embracing the world economy.
It only works if you're developing, and already have a low standard of living. Once you have living standards that require a relatively high level of income automation becomes a more economical alternative to human laborers.
Moreover shipping costs already serve as a natural protectionist barrier, yet we still outsource manufacturing jobs.
The developed countries developed their industries in isolation and with protectionism, now economics says to other countries that they should focus on other stuff and let some piece of industry be dependent on other countries industries. It may work sometimes, say if you're developing other stuff that is equally valuable, if you're not then it seems like a better deal for the one who got to develop their industry. Brazil is a very good example of this, we mostly sell low value products and consume high value products from other nations, doesn't seem like a recipe for development.
India setup the "protectionist" license raj to protect a few reigning industrial houses for "nationalistic" purposes [1]. The predatory state made it difficult not only for offshore companies, but practically impossible for domestic upstarts (without political arm-wringing). No doubt, it protected the folk it was meant to protect. In a "history-repeats-itself" moment Indian unicorns like Ola/Flipkart are seeking similar "nationalistic" laws today, seeking "protection" from "foreign capital" when it comes via Amazon and Uber - but not via VCs investing in Indian startups. Of course, all this was dressed up in "nationalistic" and "socialistic" costumes, with the media playing the tune.
China on the other hand went full Leninism and destroyed the elite (which TBH might have been more suited in India's case after Independence), so when Deng Xiaoping opened up, there were few "special interest groups" to guide things in their favor. Things today are different. China appears to me to be increasingly taking the old (crony-)capitalist route (is there any other ?). China does exactly what Ola/Flipkart want. Let's be clear as to who this benefits.
One moral is that systems can't compensate for a systematic destruction of social ethics. The other probably is to not fall into the word trap. Things meaning vastly different things are "PR-ed" with similar names to attain semantic advantages over the plebs.
[1]. Amusingly, many of these houses were built in collusion with the British Empire, and some even had their origins in the Opium trade with the Qing.
> Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.
> A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.
> “The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”
>Winter 1866-1867: One of the harshest winters in history, featuring 44 storms and averaging 18 feet of snow at the summit. Despite this, the Chinese workers continued work on the tunnels. The Tunnel 6 labor force by this time is almost completely made up of Chinese. Avalanches pose particular danger, as demonstrated at Strong’s Canyon (Tunnels 11 and 12) known as Camp 4, which included 2 gangs of Chinese and a gang of culvert men.[16]
Hacker news audience is clearly America centric! H1-B = evil because local jobs matter. But when India or any other country adopts the same philosophy of boosting local jobs, suddenly they're protectionists. Hypocrisy much?!
50 comments
[ 2.1 ms ] story [ 88.8 ms ] threadIn comparison to China, it doesn't seem India offers significant incentives to setup manufacturing except tapping into a huge market. What India has started doing right in last few years, China has been doing for more than two decades with no signs of slowing down. If you need a hint about the scale of China's manufacturing capabilities, you should read about the Fidget Spinner Gold Rush [1]. Production literally shot up overnight to cope up with the burgeoning demand. It's impossible to imagine this ever happening in India.
[1]: https://motherboard.vice.com/en_us/article/fidget-spinner-wh...
One example is if a high quality item is no longer produced because the company or division selling it goes out of business as it's priced out of the market.
Supply-side domination/flooding can and does impact buying habits.
It was impossible to image that in China also till a few years ago.
Edit: this is in contrast to China where laws are made by diktats.
Citation: https://en.wikipedia.org/wiki/Mass_line
It might change once local industry warms up attracting the supply chain.. also local software companies/developers will respond to the stimulus.. India has all ingredients to create a great ecosystem.
Manufacturing is such an iconic aspect of the economy that every government or policy maker loves to talk about it and show progress in it. India has unnecessary incentives put in place for manufacturing and Apple is taking advantage of it. But overall it's a bad deal for India.
The clothing industry does this all the time — they'll build up a local economy until it's too expensive, and then move on to the next desperate area.
If you're trying to be appealing to industry by racing to the bottom you're essentially fighting an extended battle for last place.
India, unfortunately, has a long record of getting this exactly wrong.
Wait, uh, why is this a bad thing? Isn't that what we want, to build up a local economy, to build up local capital which if the local populace invests wisely would allow their labor force to be eligible for more skilled jobs etc.
I think more likely is that more complex manufacturing will come in as infrastructure and skill set is more in place. Also improved economy leads to better education, supporting service industry.
Clothing industry may have left India and China, but both are better off now.
Where did the factories go? Bangladesh, where workers cost less and are abused more.
http://www.msn.com/en-us/money/markets/inside-alabamas-auto-...
things like self sufficiency, long-term strategic growth planning, etc. are not factored in.
also:
labor costs are huge in these scenarios.. if indian factory workers were paid what US auto workers are/were paid, I doubt apple would be taking the same strategy.
same could be said for indian mfg in general and also china..
You don't need to make 30% of something to sell it Chinese retail stores, so I don't think the two are comparable. India also has strict employment laws where once a company reaches a trivial size, it is illegal to fire anyone. The firing is then done by via government petition and you better have an airtight case to do so. So a lot of companies don't scale past x employees to avoid all the added regulation that would hurt them. That's a brake on their economy.
China is almost the opposite of this. They have so few rules and regulations that western product manufacturing moved there to enjoy the low prices. This had a trickle down effect locally. All those jobs and cheap stuff meant that they could ride the coattails of these behemoth Western economies looking for the lowest cost of manufacture. Then the Chinese slowly turned that momentum into their own manufacturing with their own brands and added token protectionism at best to keep the Westerners at arm length, but not enough to chase them away like Brazil and India do with their strict protectionism.
These two countries couldn't be more different. China has a $11T GDP while India has merely has $2T, even with similar populaions. China has literally 5x the economy India has due to market liberalization, low regulations, and embracing the world economy.
Moreover shipping costs already serve as a natural protectionist barrier, yet we still outsource manufacturing jobs.
China on the other hand went full Leninism and destroyed the elite (which TBH might have been more suited in India's case after Independence), so when Deng Xiaoping opened up, there were few "special interest groups" to guide things in their favor. Things today are different. China appears to me to be increasingly taking the old (crony-)capitalist route (is there any other ?). China does exactly what Ola/Flipkart want. Let's be clear as to who this benefits.
One moral is that systems can't compensate for a systematic destruction of social ethics. The other probably is to not fall into the word trap. Things meaning vastly different things are "PR-ed" with similar names to attain semantic advantages over the plebs.
[1]. Amusingly, many of these houses were built in collusion with the British Empire, and some even had their origins in the Opium trade with the Qing.
> Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.
> A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.
> “The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”
>Winter 1866-1867: One of the harshest winters in history, featuring 44 storms and averaging 18 feet of snow at the summit. Despite this, the Chinese workers continued work on the tunnels. The Tunnel 6 labor force by this time is almost completely made up of Chinese. Avalanches pose particular danger, as demonstrated at Strong’s Canyon (Tunnels 11 and 12) known as Camp 4, which included 2 gangs of Chinese and a gang of culvert men.[16]