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China Versus India for Product Sourcing

China versus India for IT outsourcing

The China Sourcing Blog has an interesting post, entitled, China and India: A Comparison in Sourcing Potential, on the similarities and differences between China and India when it comes to product sourcing:

There are many similarities between China and India in today’s global-economic climate. Both have over one billion citizens, both have experienced resilient growth in output, and both have greatly expanded their roles in international trade. The relatively inexpensive yet well educated workforces of these two countries have made them key prospects for the sourcing of manufactured goods. Yet differences remain in their supplier and logistical capabilities which must be taken into account by the sourcing professional.

The post sees both India and China as “capable of world class manufacturing processes.” The two countries are fairly close in terms of factory productivity, but (and no surprise here) China outperforms India on infrastructure and logistics which “may explain why India is a more common site for the outsourcing of services, particularly IT services, which do not require a physical good to be brought to market.” The post concludes that both are viable countries for product sourcing:

However, India should not be entirely discredited as a sourcing destination for manufactured goods. Both it and China have allocated over 10% of their GDPs toward infrastructure development which will enhance their future logistical abilities in bringing their products to the world’s consumers. The greatest similarity between China and India: neither can be ignored by the sourcing professional.

What do you think? I would particularly love to hear from people with sourcing/manufacturing experience in both China and India.

13 responses to “China Versus India for Product Sourcing”

  1. Having lived in, and sourced from India for 30 years, and now China, for the past 5 years, I strongly disagree that India is in any way, comparable to China. The “numbers” do not really tell the true story, at all.
    Logistics is a joke in India. It takes 3 days to unload/load a container ship in Mumbai. I have “lost” containers put on a train in New Delhi which somehow are missing when the train arrives in Mumbai. Yes, containers disappear from trains.
    The Mumbai High Court has ruled that proven theft (proven in court) is not sufficient grounds for firing a worker. To close a company/factory with more than 90 workers requires government permission, which has till date, never been given.
    India manufactures what China, for a variety of reasons, chooses NOT to manufacture: too labor intensive, too short production runs, primarily for the domestic Indian market where there are tariffs protecting the Indian manufacturer.
    The real cost of Indian labor is 2-3 times the cost of China labor when you take into account productivity, Indian workers need for excessive/extensive supervision, and the costs of benefits. This is why Chinese construction companies choose to import Chinese labor to India, for projects they are working on in India, and why, till very recently, there were 40,000+ Chinese workers in India doing construction.
    I am fully aware of the problems of sourcing in China. Nevertheless, India’s costs and logistics make it the second choice for any product currently available in China.
    With the poor response to call centers in India by American consumers/customers, I also expect China to shortly (as English in China becomes more widespread) become the destination of choice for out-sourcing.
    Similarly with software development.
    I have been waiting for 20 years for India to actualize its potential. It has not, and I believe it will not. China has, and will continue to grow market share from both developed, and other so-called undeveloped countries.
    If you look at what India is currently manufacturing, and who are the customers (most domestic), and compare this to what China is manufacturing, a truer picture of where you should source emerges.
    Walmart is not stupid. They only started sourcing in India, so that they could get permission to open stores in India, which has still not occurred. Nor have their own targets been achieved. There is not much worth buying, in comparison to China.

  2. Does China Beat India For Sourcing, Hands Down?
    Yesterday, we did a recommended reading post on a China Sourcing Blog post comparing India and China for sourcing, using statistics to do so. We very quickly received a comment from Joel Waldbaum making very clear that sourcing product from China is fa…

  3. Hello Joel,
    Yes we understand the problem we have. In India, things are SLOW and STEADY. We move slowly but firm movements. India is a democracy. Govt cannot enforce rules. Your Obama, if you are American, can enforce that Health bill, though he firmly believes it is good for you and other fellow Americans. Chinese, if they had such bills, they would have enforced long back. That is the communist and democratic regimes work.
    For Chinese, this is the third expeirment with their people. First was Mao’s GREAT LEAP. Millions died; then came GANG OF FOUR’S “cultural revolutions”. The current Deng Xiaopeng’s policy.
    Also, relying heavily on an economy which is SUPERHEATED, whose currency is state supported, is wise or not …only en expert LIKE YOU can answer.

  4. Having produced many years in India (Garments only for the European market. I completely stopped sourcing these products from India.
    At the beginning India was interesting because :
    – Quota reasons
    – Some complicated articles which China could not (yet) correctly produce
    – Lower import duties
    – Possibility for shorter production runs.
    Now all above reasons are not more valid.
    – There are no more quota issues
    – China very much matured and is very well capable of producing complicated designs
    – Shorter productions runs are also possible in China now.
    – The advantage of eventual lower import duties are not really that high.
    What makes India also not worthwhile (For me) :
    – Very bad infrastructure, poor logistics. Not uncommon to see brand new producing compounds, but no roads. Very long time between ex factory and loaded FOB.
    – Impossible to arrange an entry visa on arrival. Visa can only be issued at the home country of the appliant. Meaning, I have to fly from China to Holland. Get the visa, then fly to India and after the job back to China. Impossible situation. Moreover they refuse to give visa valid for more than 6 months. Even if I show them I already go to India for years. Already happened that productions went wrong, but I could not go because of the visa rules.
    So I source from China and other countries in Asia, but not from India anymore.

  5. Productivity is a key. I have recently been sourcing from sourcing websites. I notice that the Chinese sales people generally have in-depth knowledge of the products, understand my requirements and turn around the price quotes in a short time. Their Indian counterparts, in my own calculation, take2 to 3 times longer time.

  6. I’ve done product sourcing in both countries and the reality is that they of course both have their strengths and weaknesses. China is the place right now and will be for the next five years, but if I had to bet on the best place for most product ten years from now I would probably say India and Vietnam.

  7. I love them both for different things. We outsource a lot of our CAD work to India but use China and Vietnam for the production. We are looking at doing some production in India as well, but not quite ready to make the jump. My point though is that they both have a lot to offer.

  8. While China & India are both competitive, if a partner of the buyer takes care of the logistics challenges does India seem to be a more attractive source for goods than China?

  9. It is very easy to monopolise comments which I see is more anti-india in this forum. I am Indian and you must see actual the spirit of indian workers and owners. Also you must experience the kind of work done in IT service industry. The kind of professionalism is unmatched. Intially the work from all over world was outsourced to India only bcz of cheap rate but later it was reliased that the quality and performance which outstanding. Only thing is against india is corruption which is deep routed. So, only problem with my country is some cheap politician. If movement against corruption gets successful then india will be true democracy with more power than america, china and any other country in world.

  10. i think china have more business sence than indian do have, what ever their politician and policy may be but it is favourable for the business class who are out sourcing products and technics with technology. their labours are fast in skill and more quality sencetive to impress their clients with production they manufacture. secondly, i learned that their logistic support along with infrastructured facilities found to me more matured for export commitment than indians counterpart. above all you can compaire their export anual figure in quantity and financial figeres it is many fold more compare to india. this all is because of grassroot level corruption in india from hole to politics of stupid leaders.

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