{"id":4577,"date":"2021-09-20T16:26:52","date_gmt":"2021-09-20T10:56:52","guid":{"rendered":"https:\/\/www.tickertape.in\/blog\/?p=4577"},"modified":"2021-09-22T16:53:24","modified_gmt":"2021-09-22T11:23:24","slug":"can-china-plus-one-strategy-put-india-on-an-upwards-growth-trajectory","status":"publish","type":"post","link":"https:\/\/www.tickertape.in\/blog\/can-china-plus-one-strategy-put-india-on-an-upwards-growth-trajectory\/","title":{"rendered":"Can China Plus One Strategy Put India on an Upward Growth Trajectory?"},"content":{"rendered":"\n

China, known as the \u2018World\u2019s factory\u2019 has been the centre of global supply chains in the last few decades owing to favourable factors of production and a strong business ecosystem. The rise in the contribution of Chinese manufacturing since the early 2000s from 3.4% to ~13.6% in 2015 and then a drop to 13.1% in 2019 is clearly reflected in the total global merchandise trade. The recent decline in this share is attributed to higher labour costs, stringent environment, compliance costs, and other challenges. Around 30% of global manufacturing ($4 tn) happens in China. <\/p>\n\n\n\n

\"\"\/<\/figure>\n\n\n\n

The trend of diversifying the supply chain started in 2017 with China following stringent environment norms leading to production cuts during winters followed by changing geo-politics, trade war, and willingness of large companies\/MNC to de-risk their supply chain. COVID-19<\/a> escalated the adoption of this strategy. Now, this trend looks structural and persistent. This trend is now named as China plus one strategy.<\/strong><\/p>\n\n\n\n

So, what is China-Plus-One?<\/strong><\/p>\n\n\nCompanies contemplating diversifying their dependence on China is a strategy known as "China-Plus-One". The strategy is an answer to having efficient supply chain management <\/a><\/span>Click To Tweet<\/a><\/span>\n\n\n

Companies contemplating diversifying their dependence on China is a strategy known as “China-Plus-One”. Now many MNCs are adding new operations in other developing Asian countries like India, Vietnam, Thailand, Bangladesh and Malaysia,<\/strong> and are welcoming new manufacturing opportunities<\/a>. A strategy that is an answer to having efficient supply chain management. Sometimes, one thinks, is it a mere coincidence of such unrelated events happening together or nature is conspiring that India should take advantage of the situation and establish its mark in the global manufacturing sector.<\/p>\n\n\n\n

A survey by UBS suggests that 20-30% of manufacturing will be leaving from China.<\/strong> India is likely to be the next best candidate to benefit from this altered situation owing to its competitive advantage in various industries, favourable factors of production, conducive business environment, and incentivising government policies.<\/p>\n\n\nA survey by UBS suggests that 20-30% of manufacturing will be leaving from China, making India the next best candidate to benefit from this altered situation <\/a><\/span>Click To Tweet<\/a><\/span>\n\n\n

The government also clenched on the situation and took further steps in the same direction by introducing PLI schemes for multiple sectors like textiles, electronics, raising import duties on some products, and so on. Before COVID-19 too, the government had taken measures like reducing corporate tax rates, Atmanirbhar Bharat, and others to incentivize domestic production. <\/p>\n\n\n\n

\n
\n

Table of Contents<\/p>\n<\/span><\/div>\n