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 ZT - Is India the next China? 关于电子元件 |
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白丁
头衔: 海归少校
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加入时间: 2004/02/22
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作者：白丁 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
Electronics Outsourcing
Is India the next China?
Some OEMs and electronics contract manufacturers are looking to diversify their low-cost manufacturing base and are taking a look at India.
By James Carbone
January 15, 2004
The promise of low labor rates and access to a potential huge market has lured scores of OEMs and electronics manufacturing services (EMS) to China. By most accounts, electronics companies are satisfied with the cost savings they have achieved in China and many will increase their footprint in the land of the dragon.
However, a handful of companies who operate in China, have also located facilities in India and plan to expand operations there. Other OEMs and EMS providers are likely to follow suit in the next several years to take advantage of low-cost manufacturing and to gain access to a growing market. OEMs such as Samsung and LG Electronics and EMS providers Solectron, Flextronics and Jabil have facilities in India. LG Electronics makes home appliances and Samsung builds televisions and home appliances in India. Solectron has a design center and a manufacturing unit where it builds boards and systems. Jabil also does board assembly and final system builds in India.
Vikram Kothari, an analyst for electronics industry consultant and market researcher iSuppli, says many more EMS providers and OEMs will be heading to India over the next five years because of India's low cost workforce and to gain access to India's lucrative market. "India has the potential to become the next China," he says. "It has a long way to catch up, but India has been aggressive about improving its infrastructure, providing special economic zones and opening up its doors to business. Whether India becomes the next China or not may not be as relevant as whether India becomes a significant player," says Kothari.
Kothari says the EMS industry in India will grow as the domestic electronics industry grows. He says India's electronics industry will increase from about $12.3 billion in 2002 to $35.6 billion in 2010. Computers and consumer electronics equipment represent about 61% of India's electronics market. By 2010, that percentage will grow to 68%, according to Kothari. He says more EMS companies will move to India and by 2010 electronics contract manufacturers will handle about 30% of India's electronics manufacturing.
Kothari says India is appealing to the EMS industry for the same reasons China is appealing—low labor rates and a potentially huge market. "India has relatively skilled manpower available at very competitive costs, so manufacturing can be done efficiently and cheaply," says Kothari. He says India's average labor rate is about $3,000 per year for an employee at an electronics company.
He adds India's domestic market is small but growing rapidly. He says about 3 million PCs will be bought in India this year and the country is adding about 1 million cell phone users per month. Consumer electronics consumption is also growing in India.
Make it easy
Although India has not actively marketed itself as a location for manufacturing, it has made it easier for companies to locate facilities in the country. It has set up economic zones in which companies don't pay taxes or duties on imported goods needed for manufacturing. "All you do is import duty-free all your components and raw materials, manufacture your products and export," says Kothari. "India has made the transition from being a sort of controlled economy to a free market. The country is a lot more open to international companies coming to manufacture," he says.
Executives at electronics companies have taken notice. Philips, which has been in India for more than two decades, plans to expand operations there. Rather than just selling to the India market it will export consumer electronics equipment from India. Samsung and LG Electronics have had a manufacturing presence in India for several years and also plan to expand operations.
Of the EMS providers, Solectron has the most diversified presence in India with a manufacturing unit, a post manufacturing customer contact center and a design center. "Flextronics has taken over one of the Philips manufacturing locations," says Kothari. "The CEO of Flex was in India recently and said Flex was looking hard at India to see how they could expand and do business in India," he says.
One reason EMS providers are interested in India is because they want to diversify their manufacturing locations. "They don't want to have everything in one country," says Kothari. Some companies doing business in China were alarmed at the effect last year's severe acute respiratory syndrome (SARs) scare had on business. In addition, some are fearful that the political climate in China could change and become unfriendly to business.
However, EMS providers are concerned about India's road infrastructure and the lack of a viable electronics supply chain. The Indian government has kicked off a $10 billion national highway program to build highways connecting the country's four major cities Delhi, Bombay, Calcutta and Bangalore. The project should be complete by the end of 2004. In addition, many states within India are building roads, according to Kothari.
There is a limited supply base which means EMS providers have to import virtually all of components and production materials. However, when more major OEMs and EMS providers locate in India, the supply chain will follow as it did in China, says Kothari.
Not everyone, however, is sold on India as the next hot spot for electronics manufacturing. While India may emerge slowly as a manufacturing location, it will not seriously compete with China any time soon, according to Eric Miscoll, chief operating officer for Technology Forecasters, an EMS industry consultant and market researcher. "There are pros and cons to India," he says. "There is a growing middle class of disposable income and India has large universities. Evidently, India's customs are easier and my understanding is there is no local content requirement," says Miscoll. But a limited infrastructure and the lack of a domestic supply base will hold India back.
Why move?
Miscoll adds with all the investment global companies have made in China, there is no real reason to shift manufacturing to India, the way it was shifted from Mexico to China. "What would be the benefit? asks Miscoll. Low-cost manufacturing? China has low cost manufacturing and China's labor pool is not going to cap out for a while. We shouldn't expect any increase in China's labor rates for several years," he says.
While India may emerge as the next new location for manufacturing, electronics buyers involved in outsourcing decisions need to have a broader perspective in deciding which location is best for their companies. "If you look at the EMS industry over the last 10 years, what you see is that the desire to lower unit costs drove companies to China," says Kevin Sacks, vice president, strategic marketing and alliances, Solectron. An EMS provider which has facilities in China and India. However, the supply chain implications of transitioning manufacturing to China were not adequately considered and "that helped create the massive inventory write-offs that OEM and EMS players were faced with," he says.
He says low manufacturing cost is important, but is not the only factor involved when making outsourcing decisions. "What we really need to do is make sure our supply networks are optimized for overall performance, so the issue is lowest total cost of ownership and not just lowest unit cost," says Sacks. Total cost would include inventory cost and risk, and transportation costs as well as unit costs.
"There has been too little attention paid to the end-to-end supply chain" when making the decision of where manufacturing should be located. "People don't think about the carrying costs of inventory, the exposure to inventory and the potential write-downs and how to avoid them. You also want to give yourself more flexibility to shorten leadtimes, which will help drive market share," says Sacks.
He says some companies have pulled out of China because countries like Mexico or Romania have very comparable unit costs with dramatically better supply chains for certain products.
However, China's supply chain is improving and is more robust than India's, says Sacks. "India could make progress. India's supply chain will get developed and the country will make sense for certain products," he says. Buyers involved in outsourcing need to make sure they optimize the manufacturing they already have in Mexico or Latin America and eastern Europe, he adds.
China is far from the U.S. and Europe and many OEMs have discovered some products make more sense to build in Mexico or eastern Europe because of the products' physical size, transportation costs and complexity.
Whether India becomes a significant manufacturing location for the electronics industry will depend on OEMs, says Paul Blom, senior vice president supply chain management for EMS provider Celestica.
He says where EMS providers locate manufacturing is very much tied to where OEM customers want manufacturing to be. Often OEMs base that decision on whether they can sell their end product in a particular geography.
Many OEMs are trying to determine what kind of end market India will be. "OEMs are investigating what it takes to be a seller of end products in India which will lead into a discussion of how much manufacturing should be there. There has been more dialogue about India, but not so much for low-cost manufacturing, but more in terms of access to the market," says Blom.
He adds there is a concern about China and the need for geographic diversification in terms of manufacturing. "With tier one players there has to be a compelling reason to enter into a new country. There is a lot of dialogue about India, but so far there haven't been any strategies that call for the migration of manufacturing to India," says Blom.
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Who's Who in India
Flextronics. Entered India in 2001 when it purchased a Motorola facility. Flextronics offers printed circuit board assembly, box builds and testing services in India.
Jabil Circuit. Jabil has a 50,000 square foot plant in Pimpri, near Bombay. The plant is used for board assembly, system assembly and direct fulfillment activities.
Solectron. Has a manufacturing unit and design center in Bangalore and a post manufacturing center in Mumbai.
Celetron International. Celetron is India's largest EMS supplier and provides a full range of manufacturing and design services. It manufactures printed circuit boards and performs box builds and systems test.
Tata Infotech. Manufactures board assemblies and backplanes and mechanical and electro-mechanical assemblies, desktop document processing systems and ATMs and cash dispensers.
Samsung. Makes home appliances, cell phones. PC monitors and disk drives, laser printers, fax machines and televisions.
LG Electronics. Manufactures home appliances appliances, computer peripherals and televisions.
Source: Purchasing
作者：白丁 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
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 ZT - Is India the next China? 关于电子元件 -- 白丁 - (22460 Byte) 2004-2-04 周三, 20:22 (867 reads)
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