Manufacturing in India Vs Manufacturing in China
Published on : Monday 08-06-2020
India is capable of developing itself as a strong manufacturing base if it is willing to address certain points with an open mind, says Hemant Jog.
There has always been a comparison between Indian and Chinese manufacturing. There is always an astonishment seen when we look at the Chinese product prices. There is always a myth that quality of Chinese products is not up to the standard. We all wonder as to how China has made so much progress in the past 25 years! Here are some points which may give us some answers. These are from my experience in the industry.
Mass produce and sell everything: This is the first strategy in China. They ensure that the products are dumped at low prices in the markets which they want to capture. Once the consumer starts preferring that product may be the prices go up. We see many examples of this strategy adopted.
Simple copy-paste technique: The Chinese always believe in copy pasting a successful product. They do not spend time, energy and money in R&D. Because of this strategy they are ‘fast to market’. They save a lot of money in R&D, which of course has a positive impact on the product price.
Higher productivity: Productivity in China is much higher. An average Chinese worker definitely produces 25% higher than average Indian worker (may not be true everywhere). Automation in the Chinese industry is much higher, and that too low-cost automation. A lot of attention is paid to the multi-skill development of the employees. We need to re-look at our labour laws and make necessary amendments.
When we consider low cost automation, it is basically for saving human efforts. Monotonous operations can result in human errors. This may affect the quality of the product and ultimately the productivity. Therefore low cost automation should be used to work as POKA YOKE (mistake proofing). With the automation in place, what is most important is to right size the manufacturing line or process. Deploy that human resource where needed or for implementing improvements. In modern times Industry 4.0 is becoming a buzzword.
Every manufacturing company feels that they should be adopting Industry 4.0 but a word of caution here. First get your basics right. Take actions which can bring up the productivity and the OEE (Overall Equipment Efficiency) to the desired level and then start reviewing the relevance of Industry 4.0 for your company. Go step by step and review what is relevant to you. Industry 4.0 should be basically used to provide you the real time data which enables you to take quick decisions without loss of time. There is a myth that Industry 4.0 requires a big investment. But a step by step approach does not. Look at the payback that the investment gives you and if the payback is advantageous then and only then go for it.
Higher stability: Being a different form of the government a lot of factors are advantageous there. The government is stable and does not go for re-election every 5 years. May be due to this the infrastructure projects are undertaken with much longer time frame consideration. Of course there is a considerable change in this for past 4 to 5 years in India as well. The power availability in China is much better and is at a low cost. No industry suffers without power and in addition, power cost per kilo-watt-hour is less than half compared to India. This has a significant influence on the product cost.
Education system: In my opinion the education system has a much more practical orientation. The students are encouraged to go the best of the universities in the world by the government so that they come back and give it back to their country. We need to bridge the gap between the industry and the academics so as to get the mutual benefits.
Supply chain in the proximity: In most of the cases, the entire supply chain is built in the vicinity. Meaning the manufacturer and the suppliers are situated nearby. This must be resulting in to lowered inventories as well as low transportation costs. This results into lower product cost. Proximity of a supplier is considered to be a major advantage while selecting the source.
Partnership between government & business: We see a lot of examples where government has a partnership with the private businesses. In fact in many cases even when the multinational companies invest in China, we find that there are always joint ventures. In India we need this to happen more and more. There needs to be more unity in people, different states and the central government.
India is capable of developing itself as a strong manufacturing base if we address the above points with an open mind. May be the pandemic Covid-19 has given us the opportunity to attract companies from all over the world to establish/expand operations in India and we shouldn’t lose it!
As I write this article, the honourable Prime Minister of India, Narendra Modi has urged the nation to become self-reliant and start using goods made in India. The government has also announced a lot of schemes to help Micro/SMEs/MSMEs as well as all entrepreneurs. I think it is a great opportunity for Indian manufacturers to take the advantage of it, keep the above points in mind and start to implement actions, which will take them towards becoming competitive. In my opinion the industry should also approach government with joint venture proposals with companies in Europe or Asian countries like Korea and Japan, and have a technology transfer so that they are able to reach the excellence in manufacturing and become
the best in class! Examine carefully the possibility of government funding such projects so that you have a less burden of arranging the finance. The Maruti-Suzuki joint venture of the 1980s is a notable example of this approach, which later paved the way for the automobile revolution in India post liberalisation of the 1990s.
If we plan the implementation of all the actions well, I have no doubt that India can become a strong player in manufacturing sector and the manufacturing sector will be 25 per cent of our GDP.
Let's make it happen!
Hemant Jog is a Management Consultant in the areas of Supply Chain and Operations and is Partner in ImproveGuru Consultancy and a Director at Dietz Consulting Partners Pvt Ltd, a subsidiary of Dietz – Germany. Hemant Jog has over 33 years of industry experience in the areas of Sourcing and Supply Chain, project management and operations, with a vast experience in the automotive sector in greenfield and brownfield projects. Hemant has been associated with professional bodies like IIMM, CII and ACMA, and has worked as Head of Manufacturing Panel for CII Aurangabad.
