Take any electronic device and just check for its manufacturing. In 90% of the cases, one will find made in China written. China over the years has become a global leader in manufacturing and assembling of electronic device like smartphones, smartwatches and so on. Major reasons for this include:
- Low labor cost in China because of population exploitation.
- Less salary for even skilled labors like engineers
- The process of chip fabrication is cost-effective in China
- China itself is a large market for electronic goods.
- All raw materials required for making electronic item are easily available in China.
How a major risk by Chinese government paid off in future?
In the 1970s, China made a total of six Special Economic Zones (SEZs). Entire cities were converted into an economic hub. Shenzhen was chosen for electronic manufacturing. The reason behind the low cost of production in Shenzhen is that supply chain management is above par there. All components required to assemble a device (say smartphone) are made in this city only. Thus the cost of transportation is saved to a great extent. Consider the case of manufacturing of iPhones. Foxconn is the company behind a beautiful and beastly powerful iPhone. Foxconn develops all essential components of iPhone like processer and touch mechanism in a large factory in Shenzhen. Thus overhead cost like transportation of different components for assembly is reduced. Also if some component is not present then with the help of chip fabrication the component is brought to existence.
When will true meaning of “made in India” come to reality?
First of all the Indian government has to set up chip fabrication plants costing billions of dollars. Also, SEZs have to be made of substantial size. More educational institutes have to be set up for training and development of skilled labor. Low tax slabs will also promote more companies to initiate “make in India” program. Currently, manufacturing of some electronic devices like smartphones of Indian Brands like Intel and Smartron has been started. With more help from the government, India might also become a major manufacturing hub of the world one day.