Make in India : Challenges faced by big manufacturers – UPSC GS3

Context: Taiwanese firms like Foxconn, Wistron ,Pegatron and Quanta Computer are leaders in global electronic manufacturing having strong presence in China. They have started to shift their base to India as China is facing labour shortages and to cut their overreliance on China. However, they are facing some challenges in adapting themselves to the Indian business environment.
Recent incidents:
  • Foxconn Incident: Foxconn Technology Group, a Taiwanese supplier of Apple is facing labour upsurges due to concerns about food safety and accommodation standards. More than 17,000 people work at the facility, and in mid-December hundreds of workers contracted food poisoning. More than 150 were hospitalized.  An apple investigation has found that food sanitation and employee accommodation is below the optimal standard.
  • Wistron Incident: A year earlier, workers at a Wistron plant near the tech hub of Bengaluru ransacked that factory after being fed up with delayed and underpaid wages.
How are Chinese and Indian business environment different from each other?
  • Language and cultural barriers: Common language and successive leaders’ pro-business policies in China made it easier to set up production units and hire workers there. In India, they face language barriers, cultural differences and changed political set up.
  • Infrastructure: India lacks the infrastructure Taiwanese companies are accustomed to relying upon when setting up local facilities.
  • Management style: Taiwanese businesses generally used their own executives in China, while in India they will have to increasingly rely on local leaders to set up and run operations. This requires adequate training and support so that they can mix the rigid Taiwanese approach to operations with a more relaxed worker culture found in India.
  • Local governments: Local governments in China will mostly side with companies over workers. That’s less likely in India, where leaders need voter support at election time.
  • Time availability: When they were setting their plants in China the Taiwanese companies faced similar challenges like in India, but then they had decades to adapt to the local landscape and the demand was also low.