5 ms·

Companies don't invest billions in India to shaft China, they're doing it to maintain or grow their position on the Indian market, which is a huge one. If India

Companies don't invest billions in India to shaft China, they're doing it to maintain or grow their position on the Indian market, which is a huge one. If India suddenly sees a wave of "build it at home" sentiment then Google or Apple won't want to be left out and fall behind the competition. Publicly traded companies can't afford to play favorites, they "have to" go where the profits are and make the best of it, whether it's decades of being the mole in a wack-a-mole game with the Chinese system, or having to invest extra billions in India. For example the largest manufacturing plant BMW has is in the US. But that's not because it's cheaper to build there, or because they want to shaft Germany. It's because they wanted access to that market in an economically and socially acceptable fashion, making them the biggest auto exporter by value in the U.S. The "socially acceptable" may not have worked since even the White House was unaware of this, presumably many Americans also.

bamboozled 6y ago
No, but they need to make logical decisions about which market to invest in, and it seems they've picked a favorite and decided ? If I was making that decision, it would be clearly easier to do business in India rather than China and likely far more lucrative with less concerns about property theft, censorship and the stain that human rights abuses will leave. I don't know if you've ever tried to setup anything in China, it's not exactly a straight forward process or something you'd want to have to do often.
- buran77 6y ago
  > it seems they've picked a favorite and decided ? It doesn't look like this to me. India's population is within 50 million of China but has double the growth rate. Even if the GDP per capita (nominal or PPP) is about half of that of China, it still has a huge potential as a market and it never received enough attention. Companies are starting to see that potential now. We shouldn't anthropomorphize company decisions, they are generally purely pragmatic. There were money on the table, it doesn't imply India will be the biggest or most profitable market or production center. While domestic consumption in big markets that demand local production will be satisfied as such (so an Indian iPhone might say "Made in India"), companies will still supply other markets with products coming from the factory that allows them the highest profits (so a US or EU iPhone will likely still say "Made in China"). > it's not exactly a straight forward process or something you'd want to have to do often. Designing and building an iPhone are also not very straight forward but if it's profitable companies will do it. That's why so many companies still operate in China despite the chicanery.
  - eldaisfish 6y ago
    >India's population is within 50 million of China but has double the growth rate. What on earth are you talking about? India's growth rate in the past decade is nowhere comparable to China's. Even if you argue that China cooks their books, you cannot discount the volume and value of trade that China does with numerous other countries. http://statisticstimes.com/economy/china-vs-india-economy.php http://statisticstimes.com/economy/china-vs-india-economy.ph... >it still has a huge potential as a market and it never received enough attention India has hordes of poorly educated and poor people combined with a minuscule middle class - a definition that is expanded to include people one financial disaster away from poverty. The real market is China, not India, with its growing middle class and easy access to the full spectrum of manufacturing needs combined with a large market.
    - buran77 6y ago
      > India's population is within 50 million of China but has double the growth rate. The growth rate refers to the population.
      - eldaisfish 6y ago
        thanks. i misread that and assumed that growth implied economic growth. My other point stands - India's market with any meaningful purchasing power is minuscule compared to China's.
      - vidarh 6y ago
        India's population growth is largely just trailing China by ~30 years. Current projections seems to suggest China's population will peak around 2030, and India around 2060. It's clear India's population will exceed China's, but it won't get all that much higher as birth rates in India are dropping with development like most other places.
- dis-sys 6y ago
  > I don't know if you've ever tried to setup anything in China, it's not exactly a straight forward process or something you'd want to have to do often. try doing that in india, good luck for stable electricity supply.
Shivetya 6y ago
Pretty sure there is a little bit of China exit strategy here as well. The actions taken in Hong Kong along with recent invasion demonstrations against Taiwan don't exactly make for a stable business environment. What is a business to do if China acts violently on either and suddenly your supply chain if off limits because of sanctions? Still after moving segments to India the next area is where? Africa is still a source of cheap labor but too many countries there suffer from stability issues. Figure within a generation it will be both viable market and manufacturing base.
- laurent123456 6y ago
  Google has pretty much no business in China, so it makes no difference for them what's happening there.
notahacker 6y ago
Yeah, I don't read any commentary on the current China situation at all into this decision. The appeal of India's growing middle class, IT outsourcing industry, Android-centric smartphone market, widespread English fluency and emerging domestic startup scene is there for a Google wanting access to that market and a base for certain types of operations regardless of what China's doing.
peterwwillis 6y ago
> they're doing it to maintain or grow their position on the Indian market That's not the main reason for moving manufacturing. You move manufacturing to exploit lower prices in the production chain (and other logistical considerations). It's why one $10 t-shirt is produced by work in 10 different countries, and why that too is constantly shifting. It's harder to "shift" a massive centralized tech industrial manufacturing system, but if the cost savings are there, you move. I think everyone is now aware that China is finally developing a middle class and starting to clean up its rampant abuse of its environment, meaning it's going to cost more to manufacture there. Time to look for another developing nation to exploit, and India is a gigantic and attractive target with a lot of potential. Building (and selling) cars is quite different than phones, advertising, or internet services. BMW produces mostly SUVs in its Spartanburg plant, and it sells most of those SUVs in the USA (its biggest market), so it's more profitable (tariffs, shipping, JIT, etc) to make them locally. All other BMWs in the USA are imported. Manufacturing your tech in your biggest market (now or the future) may be unnecessary and less profitable if you can squeeze more out of the production chain in another country. China has just been so god damn cheap for so long (and so free with its loans) that it's totally fine if they aren't even one of your biggest markets. But they won't be that cheap for much longer, especially if the USG makes it harder/more expensive.
- fny 6y ago
  This isn't about manufacturing. This is $10B for /digital/ services. Google dreams of being allowed into that market. The Great Firewall prevents it outright.
kumarvvr 6y ago
> Publicly traded companies can't afford to play favorites, they "have to" go where the profits are and make the best of it, whether it's decades of being the mole in a wack-a-mole game with the Chinese system, or having to invest extra billions in India. True to some extent only. Apart from profits, publicly traded companies also clamour for a stable business environment. And authoritarian countries have an inherent risk, due to the nature of their government and uncertainty on the world stage. No one can make 50 year plans for China, like they can do with US, Europe or UK. It's the same case with India too. Democracies provide an extra level of stability.
- buran77 6y ago
  > clamour for a stable business environment > Democracies provide an extra level of stability. That's very true which is why I said "make the best of it" (i.e. "of a bad situation"). Companies will have to operate under different assumptions and making different plans than they would under normal conditions. Think "peace time vs. war time CEOs". But this is what makes these companies successful, the ability to juggle with unknowns, hostile conditions, uncertain future. It's a gamble but not that different from what Tesla or SpaceX did when jumping into the unknown. They're different types of unknowns but still just as risky, able to easily sink a ship.
- deleted 6y ago
  [deleted]
- munificent 6y ago
  > No one can make 50 year plans for China, like they can do with US Five years ago, I would have agreed with you about the US. But the direction that politics have gone since then makes me a lot less sure. The rate that corruption has grown under the Trump without repercussions is absolutely astonishing. Like any relationship, I don't know how that break in trust between the government and its citizens can be repaired.
  - newfriend 6y ago
    Give me a break. Very little has effectively changed in the past five years, aside from the insane polarization of the media. The Trump administration's "astonishing rate of corruption" you are perceiving is being massively overstated by partisan media outlets. Previous administrations were free to engage in all manners of corruption, while the mainstream media touted their "coolness".

bamboozled 6y ago

No, but they need to make logical decisions about which market to invest in, and it seems they've picked a favorite and decided ? If I was making that decision, it would be clearly easier to do business in India rather than China and likely far more lucrative with less concerns about property theft, censorship and the stain that human rights abuses will leave. I don't know if you've ever tried to setup anything in China, it's not exactly a straight forward process or something you'd want to have to do often.

buran77 6y ago
> it seems they've picked a favorite and decided ? It doesn't look like this to me. India's population is within 50 million of China but has double the growth rate. Even if the GDP per capita (nominal or PPP) is about half of that of China, it still has a huge potential as a market and it never received enough attention. Companies are starting to see that potential now. We shouldn't anthropomorphize company decisions, they are generally purely pragmatic. There were money on the table, it doesn't imply India will be the biggest or most profitable market or production center. While domestic consumption in big markets that demand local production will be satisfied as such (so an Indian iPhone might say "Made in India"), companies will still supply other markets with products coming from the factory that allows them the highest profits (so a US or EU iPhone will likely still say "Made in China"). > it's not exactly a straight forward process or something you'd want to have to do often. Designing and building an iPhone are also not very straight forward but if it's profitable companies will do it. That's why so many companies still operate in China despite the chicanery.
- eldaisfish 6y ago
  >India's population is within 50 million of China but has double the growth rate. What on earth are you talking about? India's growth rate in the past decade is nowhere comparable to China's. Even if you argue that China cooks their books, you cannot discount the volume and value of trade that China does with numerous other countries. http://statisticstimes.com/economy/china-vs-india-economy.php http://statisticstimes.com/economy/china-vs-india-economy.ph... >it still has a huge potential as a market and it never received enough attention India has hordes of poorly educated and poor people combined with a minuscule middle class - a definition that is expanded to include people one financial disaster away from poverty. The real market is China, not India, with its growing middle class and easy access to the full spectrum of manufacturing needs combined with a large market.
  - buran77 6y ago
    > India's population is within 50 million of China but has double the growth rate. The growth rate refers to the population.
    - eldaisfish 6y ago
      thanks. i misread that and assumed that growth implied economic growth. My other point stands - India's market with any meaningful purchasing power is minuscule compared to China's.
    - vidarh 6y ago
      India's population growth is largely just trailing China by ~30 years. Current projections seems to suggest China's population will peak around 2030, and India around 2060. It's clear India's population will exceed China's, but it won't get all that much higher as birth rates in India are dropping with development like most other places.
dis-sys 6y ago
> I don't know if you've ever tried to setup anything in China, it's not exactly a straight forward process or something you'd want to have to do often. try doing that in india, good luck for stable electricity supply.

Shivetya 6y ago

Pretty sure there is a little bit of China exit strategy here as well. The actions taken in Hong Kong along with recent invasion demonstrations against Taiwan don't exactly make for a stable business environment. What is a business to do if China acts violently on either and suddenly your supply chain if off limits because of sanctions? Still after moving segments to India the next area is where? Africa is still a source of cheap labor but too many countries there suffer from stability issues. Figure within a generation it will be both viable market and manufacturing base.

laurent123456 6y ago
Google has pretty much no business in China, so it makes no difference for them what's happening there.

notahacker 6y ago

Yeah, I don't read any commentary on the current China situation at all into this decision. The appeal of India's growing middle class, IT outsourcing industry, Android-centric smartphone market, widespread English fluency and emerging domestic startup scene is there for a Google wanting access to that market and a base for certain types of operations regardless of what China's doing.

peterwwillis 6y ago

> they're doing it to maintain or grow their position on the Indian market That's not the main reason for moving manufacturing. You move manufacturing to exploit lower prices in the production chain (and other logistical considerations). It's why one $10 t-shirt is produced by work in 10 different countries, and why that too is constantly shifting. It's harder to "shift" a massive centralized tech industrial manufacturing system, but if the cost savings are there, you move. I think everyone is now aware that China is finally developing a middle class and starting to clean up its rampant abuse of its environment, meaning it's going to cost more to manufacture there. Time to look for another developing nation to exploit, and India is a gigantic and attractive target with a lot of potential. Building (and selling) cars is quite different than phones, advertising, or internet services. BMW produces mostly SUVs in its Spartanburg plant, and it sells most of those SUVs in the USA (its biggest market), so it's more profitable (tariffs, shipping, JIT, etc) to make them locally. All other BMWs in the USA are imported. Manufacturing your tech in your biggest market (now or the future) may be unnecessary and less profitable if you can squeeze more out of the production chain in another country. China has just been so god damn cheap for so long (and so free with its loans) that it's totally fine if they aren't even one of your biggest markets. But they won't be that cheap for much longer, especially if the USG makes it harder/more expensive.

fny 6y ago
This isn't about manufacturing. This is $10B for /digital/ services. Google dreams of being allowed into that market. The Great Firewall prevents it outright.

kumarvvr 6y ago

> Publicly traded companies can't afford to play favorites, they "have to" go where the profits are and make the best of it, whether it's decades of being the mole in a wack-a-mole game with the Chinese system, or having to invest extra billions in India. True to some extent only. Apart from profits, publicly traded companies also clamour for a stable business environment. And authoritarian countries have an inherent risk, due to the nature of their government and uncertainty on the world stage. No one can make 50 year plans for China, like they can do with US, Europe or UK. It's the same case with India too. Democracies provide an extra level of stability.

buran77 6y ago
> clamour for a stable business environment > Democracies provide an extra level of stability. That's very true which is why I said "make the best of it" (i.e. "of a bad situation"). Companies will have to operate under different assumptions and making different plans than they would under normal conditions. Think "peace time vs. war time CEOs". But this is what makes these companies successful, the ability to juggle with unknowns, hostile conditions, uncertain future. It's a gamble but not that different from what Tesla or SpaceX did when jumping into the unknown. They're different types of unknowns but still just as risky, able to easily sink a ship.
deleted 6y ago
[deleted]
munificent 6y ago
> No one can make 50 year plans for China, like they can do with US Five years ago, I would have agreed with you about the US. But the direction that politics have gone since then makes me a lot less sure. The rate that corruption has grown under the Trump without repercussions is absolutely astonishing. Like any relationship, I don't know how that break in trust between the government and its citizens can be repaired.
- newfriend 6y ago
  Give me a break. Very little has effectively changed in the past five years, aside from the insane polarization of the media. The Trump administration's "astonishing rate of corruption" you are perceiving is being massively overstated by partisan media outlets. Previous administrations were free to engage in all manners of corruption, while the mainstream media touted their "coolness".