Sourcing In India Vs China: Which is Right For Your Business?

In the wake of the Covid-19 global pandemic, many firms are considering how they should restructure their supply chains and which countries would be best suited to their sourcing and manufacturing goals. For many businesses, this often comes down to sourcing in India vs China and which option makes more sense for their company given the strength of those countries in providing manufacturing resources and infrastructure.

When considering sourcing in India vs China, there are many important variables to consider ranging from each country’s political climate to their unique manufacturing capabilities. Let’s take a look at some of these different factors to help business owners decide which country makes sense for their firm.

Benefits of Manufacturing

China has long been regarded as the manufacturing capital of the world. It has by far the most infrastructure, facilities, and manpower dedicated to manufacturing goods and services quickly and efficiently. For business owners in many industries, it will provide the greatest range of options of suppliers and logistics coordinators.

Moreover, Chinese manufacturers typically place a strong emphasis on lowering prices and widening margins for business owners. Company culture in many Chinese manufacturing companies is often strict and uncompromising, ensuring the maximal productivity from each hour of workers’ labor.

Benefits of Manufacturing in India

India is regarded as a rising star by industry experts when it comes to global sourcing and procurement. Considering that China’s labor costs are rising, diplomatic tensions with trade partners are intensifying, and environmental concerns are becoming front-and-center, business owners are looking to India as a manufacturing hub.

In fact, it has already become a world leader in automobile manufacturing as well as a number of other product categories, and business owners are enjoying numerous benefits of manufacturing in India. Unlike China, India is known to take a quality-over-quantity approach to manufacturing, with many company cultures emphasizing the craftsmanship and durability of products.

India also excels in offering a truly creative workforce that can design and create products that are innovative and original. This also differentiates India from China, which often embodies more derivative or duplicative design patterns. Finally, for most Western business owners, communication is markedly easier with Indian manufacturers than Chinese manufacturers as English is far more prominent and widely spoken.

Political Climate in China Vs India

It’s no secret that China has the most long-standing, established, and entrenched relationships with many global trade partners, including the United States. The mutual dependence between China and importing countries that rely on their manufacturing capabilities is difficult to overstate. Moreover, this marriage between Chinese manufacturers and Western importers has been built and cemented over a long period of time.

However, recent trade tensions between China and some of its trade partners, and talk of a trade war between China and the US have shaken some experts’ confidence in China’s continued political viability as a leading trade partner.

On the other hand, India has not been the historical manufacturing titan that China has been, but it is making some great strides in a positive direction. It has recently introduced the Make In India initiative, and several other government-led plans to establish itself as an even more ideal trade partner and manufacturer.

India’s political roots and ideologies also share more in common with many of its Western trade partners. It is a democracy that places more of an emphasis on human and civil rights than China.

To sum up, China is still incontrovertibly the leader in terms of political ties to prominent trade partners. But, given India’s political history and government initiatives to stabilize its economic and political climate, it could well present a better manufacturing hub for some business owners.

Popular Exports from China

China’s top exports include broadcasting equipment, computers, office machine parts, integrated circuits and telephones. For many of these product categories, it is considered an industry leader. For business owners interested in manufacturing products in these categories, China could well be worth a look when searching for a manufacturing hub.

Popular Exports from India

Popular exports from India include petroleum products, precious stones, vehicles, machinery, iron and steel, chemicals, pharmaceutical products, cereals, and apparel. For business owners interested in manufacturing products in these categories, India could well be worth considering as a manufacturing hub.

The Future of Manufacturing in India Vs China

Considering its long history as a global manufacturing leader, China is sure to play a central role in firms’ sourcing efforts for years to come. It’s world-class facilities, manufacturing infrastructure, and expertise aren’t going anywhere fast, and it will no doubt be top-of-mind for companies considering low cost country sourcing. China does, however, have many challenges to overcome in the years ahead including increasing tensions with global trade partners, rising labor costs, and a global pandemic that began within its borders.

Given recent world events and a multitude of government initiatives that India has committed to in order to strengthen its economy and infrastructure, it seems inevitable that India’s manufacturing sector has a bright future. Many firms currently sourcing in China are already looking to diversify their manufacturing portfolio by sourcing from India as part of a China-plus-one strategy. Other firms that are just now exploring low cost country sourcing are considering India as a lucrative and in some cases superior option to China.

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