Why China Why Not India

*Why China and not India?*

International Business: Why didn’t American companies choose India instead of China for manufacturing products?

– Haosen Cai, Engineer

I’ve come across similar questions from time to time on this very topic and I don’t recall anyone ever pointing out the true reason.

The reason as to why India can’t outperform China in manufacturing is NOT because of infrastructure, it’s NOT because of skilled labors, it’s NOT because of corruption, and it’s also NOT because of “superiority of the Chinese mentality”.

I’d like to answer this question with this noun

Unpredictability

Now repeat after me.

Unpredictability

Unpredictability

Unpredictability

This is the single most powerful noun that’s preventing India from being a manufacturing hub – because doing business in India is so god damn unpredictable, therefore it is impossible to calculate your return on investment when dealing with India.

Bad infrastructure? No problem, that can be factored into shipping cost & delivery time

Lack of experienced labors? No problem, that’ll factor into capital/startup cost

Corruption? No problem, tell me who I need to pay and how much, that’ll become part of operating cost

Lots of paper work? No problem, longer startup time means lower return on investment, but that again, can be calculated, and can be made up with higher profit margin.

You know what the problem with India is?

NOTHING CAN BE CALCULATED

In India:

When someone says “yes”, you have no idea whether he/she actually meant yes or no.

When a worker say that “I’ll be there in 5 minutes”, you have no idea whether he’s one of those workers who keeps his word, or he’s one of those workers who’ll just show up 4 hours later

When an official approaches you and ask for “expedition fee”, you have no idea how much he’s asking, and how much faster he can expedite, and how many more like him are coming

When you are presented with a pile of paperwork, you have no idea whether this is the last pile, or whether there are 20 more piles that’s coming after, and whether you were even given the correct paper works to fill out.

Heck, even if you have someone coming in to help, you have no idea whether he’ll hit a cow on the way here and then forced to wait for another 8 hours for a shaman to show up and complete the ritual.

All that plus the occasional “I refuse to work with people from that caste” plus union strike and power outages makes doing business in India extremely unpredictable.

If you are a business owner, would you buy from someone who sells you the same item with $3, knowing that the goods will likely be delivered on time and to specification, or are you going to buy from someone who sells you for $2, but you have no idea when, or even if you’ll get that item?

Most people would buy it for $3, then just markup the profit.

Business is all about predictability, trying to make money without ability to predict is called gamble, and business owner don’t like to gamble when they could avoid it.

So to wrap this up.

Unpredictability is what’s killing manufacturing in India. Not infrastructure, not mentality, not corruption, not skilled labor.

It’s UNPREDICTABILITY, in capitalized bold letters.

Published by Hisham Kabir

Hisham is an MBA from MET, Mumbai and an alumnus of Symbiosis Institute Of Business Management, Pune, with a Management Deveoplemt Programme (MDP) on Sales Management from The Indian Institute of Management (IIM) Kozhikode, have worked with public relations division of Uniliver in Mumbai handling brands like Surf, Rin & Sunlight detergents. Formerly Chief Operating Officer of Ideal Caterers (family business established in year 1984) a leading outdoor caterer in Kochi and having services in Trivandrum and Kottayam. Hisham is the first Entrepreneur to successfully incubate out from CIFT Business Incubation Cell (A Govt Of India Enterprise) Hisham have ventured into food processing sector by launching a ready to cook curry paste with brand name "Freedom Kitchen" using technology from DFRL (Defence Food Research Laboratory in Mysore) with a vision to change the way indian domestic kitchen would operate. All aspects of brand design & development for the brand "freedom kitchen" from concept, brand naming, colour selection,brand story, Barcode GS1 formalities, to copyright to vertical package designing and print development was independently handled by him. Hisham was key accounts executive at Kerala's leading advertising agency stark communications. An avid automobile enthusiast with a passion for advertising, have conducted an exhibition on the world’s most celebrated advertising campaign titled the History of Volkswagen Beetle ads, at the Durbar Halls Arts Gallery in Ernakulam and at MET Campus Mumbai. He is also a guest faculty at various management institutes in Kerala and Tamil Nadu. He talks on entrepreneurship, advertising strategies, and business management. He has given guest talk to management students at Rajagiri Institute Of Management, Amrita Business School, Coimbatore, MET Mumbai, TKM Institute of Management, to name a few.

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