Coronavirus: Why China Will Remain World’s Biggest Manufacturing Hub Despite Covid-19

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Today the world is experiencing the ravages of this virus originated in China and at the same time they are experiencing grief and agony towards china. But, why India still lags behind and can’t squeeze the benefits of this situation and channelize people’s grief towards China as a propitious opportunity for India?

Road Transport and Highways Minister Nitin Gadkari recently in the Indian media said that the world’s displeasure with China is like a boon for India. That means that the world is looking at china with hatred due to the current coronavirus situation and India could use this opportunity for its benefit. . Gadkari also said that clearance and other facilities need to be expedited to boost foreign investment.

Great opportunity for India

Experienced professionals believe that India could use this opportunity to attract manufacturers from China and give them favourable circumstances to set up their manufacturing base in India. At present, India is in contact with 1000 companies in China. . All departments and the RBI, including the Finance Ministry, are formulating policies to win the post-Corona economic battle. This campaign is also strengthened by the fact that US President Donald Trump has intensified criticism against China and is keen to dig the true story and facts related to the virus spread in China. 

US blames China for the spread of coronavirus

The US has made a serious charge against China that it initially concealed the spread of the corona virus from the world which at present has created turmoil and havoc in the world taking lives of innocent people and other dying through poverty, misery and unemployment. According to a recent survey, two-thirds of the Americans blame China for the destruction and devastation that the virus has created.

In such nationwide allegations and blame to China it looks very natural that companies from China will be willing to set up their manufacturing base in other countries especially India. However, this is not the case. This news is far from truth.

Companies are not leaving China

A person from Ministry of Commerce of India said that the news of the exodus of big companies from China is jumble.

Kerr Gibbs, president of the American Chamber of Commerce in Shanghai, two weeks ago said, “Our survey results show that companies are considering to bring flexibility in strategy due to Covid-19 but there has been no mass exodus of companies”.

Devastation in world; China all set to revive its economy

Currently America and Europe are in the grip of epidemic. India is also in the grasp of the same. Cases of coronavirus are on a spree and don’t see a fullstop in the near future.  Total cases in the world has reached 3.44M out of which 1.16M cases are in America. All economies are witnessing steep decline and all economic operations lay on a standstill. Hospitals are flourishing with ill patients, cremation grounds are running out of space, medical facilities are inadequate in various countries, images/videos of people lying dead on streets in Italy and Spain are flourishing over social media.

On the other hand, China who has spread the virus in the world has almost come out of this pandemic and its economy again is back on track. Also, it has started launching schemes so that common public could increase its demands and Chinese economy can bloom.

It is obvious that foreign companies present in China will be welcoming these preparations.

Only one company moved from China amid coronavirus

At present, only Japanese motor company Mazda has removed a part of its factory from Jiangsu region of China after the outbreak of Corona virus. It has planted its new plant 13,000 kilometers away in Mexico. Not angry with China because of this, rather the economy there was destroyed due to Corona and that’s why the company changed its base.

Why China is the most preferable manufacturing destination?

The truth is that many international companies do not want to rely solely on China but their helplessness is that there is no country in the world that could compete against the world’s largest manufacturing hub – CHINA

Big companies choose China because it is a ‘one-stop shop’ that is, all facilities from raw materials to finished goods and its exports are available here.

However, companies in China do have a back – up

This does not mean that companies are not moving from China to other countries. This is already happening. This series started three years ago when China Labor cost increased significantly. It gained momentum due to trade war between USA and China.

Foreign companies currently have the formula ‘China plus one’ i.e. stay frozen in China but keep one step somewhere else.

India losing opportunities

India’s economic experts believe that India has the best opportunity to woo foreign companies. However, India is also losing various opportunities.

The trade war between US and China was a good opportunity to bring Chinese companies in India but India was unsuccessful in doing so and reaping the benefits.

Surprisingly, the Ministry of Commerce of India and Indians all over the world are trying to attract foreign companies operating outside India for last two-three years with futile results.

Ministry sources said that more than 200 companies and factories have shown interest in India for setting up their base but after the outbreak of Corona, there is possibility of no activity for months.

China’s infamy because of Coronavirus is also being seen as an opportunity but the Modi government knows that at present there is no big company coming from China to India.

The time for Indian governments to replicate China’s basic structural model and make provisions for single window clearance was enough, however, India could not do it.

Experts say that even if there were no opportunities like Corona and Trade War, companies would set up their production units in India.

Prime Minister Modi while taking his oath asked the foreign companies, “come, make in India”. But the truth is that foreign companies are still reluctant to come to India. India has some favourable things to offer like skilled work force in large numbers, huge domestic markets, democracy and cheap land. But compared to China, India is far behind in many areas.

How China is better than other economies?

The process of obtaining raw materials to bringing the finished goods in the market is called value chain.  In this, no economy of the world can compete with China.

Specialist in Chinese affairs at Delhi’s Institute of Management, Faisal Ahmed says that the removal of large products and factories from China is not possible as there is no competition between other countries complete value chain and China’s.

He said, “Currently there is no economy in the world where there is means for mass production or complete infrastructure of exports”. According to him India needs to strengthen its value chain and technology. There is a dire need for modernization.

Labor, electricity and land reforms

Experts on economic matters close to the government suggested to invest in land, power and labor to attract foreign companies. They said, “With quickness we need to create a Land council, Labour council and Energy council equivalent to GST council”. They feel that this will ease the way for those foreign companies who want to set up factories or start a new business

Industrial electricity tariff in India is believed to be one of the highest tariffs in the world. There should be an agreement between the central and state governments to reduce it.

Single window clearance

There is no doubt that the Prime Minister strongly emphasized the Ease of Doing Business but outside companies still complain that they have to visit many government offices in the approval of the schemes.

One suggestion given to the government is that of single window clearance. It is also suggested that if we have to compete with China, then work in these areas need to be hastened. Bullet trains have to be done at the speed.

Experts say that if the Prime Minister has to make the country a trillion dollar economy and progress after the sluggishness of economy due to lockdown, India needs to, “Do it now, do it fast.”

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