Best Place to Source your Products, India or China?

“Low cost country sourcing” has been the tried and tested mantra of the supply chain industry.  It’s no longer just the big boys who are capitalizing on the advantages of low cost labor from preferred manufacturing destinations such as China and India, but even the mom-and-pop businesses have begun to take it up.  Whether you are looking for cost effective suppliers of various products or for a state of the art manufacturer to get your products manufactured, China and India provide  numerous options.

So which of these destinations do you go with?  It makes a lot of sense to start your search for suppliers or manufacturers from these countries by comparing them in the first place. Each of these countries has its own set of advantages and disadvantages, but they  hold on to some similarities at the same time. These similarities are many but can be essentially summarized into a few areas.  One major area is the relatively inexpensive yet well-educated workforces of these two countries.  The other, both are capable of deploying world class manufacturing processes and the two countries are fairly close in terms of factory productivity. This, however, is where the similarities end and differences begin.

Typically what you will encounter when sourcing or manufacturing from India are logistics and labor issues which might hamper timely deliveries. Logistics problems experienced by Indian companies can be attributed to poor infrastructure and power.  Additionally, labor issues may create further delays and  strikes or local political activities may be a cause of extended disruptions.  Also, the rapid growth of the Indian economy over the last two decades has boosted the spending power of the 300 million strong middle class population. This has provided local manufacturers with an expanded domestic market that now competes with orders from outside India’s shores.

China, on the other hand, has invested heavily on state-of-the art infrastructure and power; it boasts of some of the most technologically advanced factories and ports. The China government quickly counters labor disruptions while constantly aligning the need for such tactics with larger nation building goals. This has worked to produce a minimally disruptive labor force. The picture is quite different  across the border, in India. In the world’s largest democracy, labor unions and local political parties play an omnipresent role in setting labor standards, sometimes at the cost of production efficiency or continuity.

On the brighter side, India has a significant advantage over China. This is due to the fact that the Indian exporters have a better understanding of western business processes and culture.  Additionally, India has strived to take greater responsibility for quality whereas China still has the reputation for cheap and low quality products.  India could adopt English as its informal national language due to the British colonial influence.  Majority of the Indian population gets an exposure to the English language from early school years and all domestic businesses are conducted in this language.  China, on the other hand, has only recently made efforts to get its population comfortable with English as a way to respond to the demands of rapid globalization.  The government has rolled out aggressive polices to upgrade the English language skills of its employees while building frameworks to promote English-language education in schools.

Both India and China have their similarities and differences within the global sourcing landscape. These nations continue to be the leading destinations for “low cost country sourcing”. China clearly leads when we consider the condition of its infrastructure and stability of its labor. But India makes up for these with better knowledge of western cultures and English, as well as with its continued attention to quality. As a customer, it is you who needs to  carefully evaluate the production capabilities, quality systems and logistics network of the suppliers in order to be able to make the right “To source or not to source” decision . But remember, the suppliers’ capability to deliver is also dependent on the social and political state of their countries.

Summary:

The comparative discusses low cost sourcing options from India and China, the similarities and differences between the two countries within the global sourcing landscape are analysed.

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4 thoughts on “Best Place to Source your Products, India or China?

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