China should focus on upgrading its manufacturing amid rising competition from India which with its labour advantage has become an attractive destination for multinational firms like Apple, Chinese official media said.
As US President-elect Donald Trump pledges to bring manufacturing jobs back to the US and China’s competitors seem to be further expanding as an Apple manufacturing partner is working to build an assembly facility in India, an article in the state-run Global Times said today.
“Apple’s possible supply chain transfer to the South Asian country adds further pressure on China as its domestic manufacturers show a growing interest in offshore production to low-cost countries,” it said.
“Whether India is ready to embrace the supply chain transfer and replicate China’s success as a manufacturing powerhouse is another story. But the evolving landscape highlights the need for China to design a strategy to retain manufacturing jobs and upgrade its manufacturing industry to maintain competitiveness,” it said.
Despite Apple’s bumpy journey to expand operations in India when its application to open stores was rejected because at least 30 percent of mobile parts production was not localised, an opportunity seems to have opened up as senior Indian officials have softened their stance, it said.
“And it won’t be difficult for Wistron to make a large investment or generate jobs. Apple’s partner Foxconn has displayed the potential for job creation in India,” it said.
“If Apple expands in India, more global tech giants may follow suit and China is likely to see a further transfer of the supply chain given India’s abundant supply of working-age labourers and low labour costs.
“China cannot afford to lose manufacturing jobs while it has not made a major breakthrough in upgrading its industry and while Trump plans to draw manufacturing jobs back home,” it said.
“Industrial competition between China and India comes down to the labour force, where costs and the level of skills are two major factors that influence business decisions. Although China has an edge having nurtured skilled workers over past decades, a majority of Indian states have an absolute labour cost advantage over China,” it said.
“The situation requires China to seriously consider how to plug in the hole if manufacturers continue to move elsewhere,” it said.
The country should also speed up its manufacturing upgrade through restructuring and reorganisation of technologies, talents, capital and other resources,” it said, adding that these options could create investment opportunities and generate jobs.