Jacqueline Vong - Diversifying Beyond China: tBT Person of the Week
As the anniversary of the first international reported case of Covid-19 has come, we have seen a growing interest in relying less on the Chinese market for manufacturing. There are a number of reasons to look beyond China including labour prices, exchange rates, container availabilities, long holidays delays. To further support this, Josh Punin of Trade Asia Pac eloquently states, this is “driven by retailers in US where they need to start seeing a diversification and production outside of China. It’s not about taking away <opportunities> from China.”
Many companies have considered outsourcing low-cost manufacturing to South East Asia in places like Vietnam. While we see some success stories coming out, we also know that SEA factories still have a long road ahead of them to compete with China’s capabilities and labor force just in terms of numbers. Additionally, if some components are manufactured in other countries, they end up being shipped to China for consolidation and it becomes a ‘made in china product’ once again.
But let’s explore India as an option. Punin has formed a new India based consulting group with long time toy veteran David Selveraj based in Chennai sees the Indian market as a huge opportunity right now.
India is the only population in the world that can rival China’s workforce. As 75% of the world’s toy manufacturing comes out of China and only 1% currently comes out of India, it is time to explore the emergence of India as a manufacturing power.
Many other advantages of India come straight to mind – the fact that international business is done predominantly in the English language, and the holiday schedules are not as long. Steve Reece, an expert on the Indian toy market states: “India has already become one of three primary manufacturing hubs for toys today and will continue to grow rapidly over the next decade.”
While the common belief is that India does not have the quality standards as well as the work ethic, India has come a long way and under the right conditions, it is quickly organizing itself on the global and domestic stage to be a big manufacturing player in the toy industry. Major toy companies like Hasbro and Spin Master have been expanding in their manufacturing footprint in India and with the support of Modi’s Indian government on labor laws, factory incentives, taxation and compliance, the foundation is being laid down for this country. And, under the guidance from international best in class companies like Walmart, who has made a commitment to import $10 B Indian made goods by 2027, India is making large strides in the manufacturing sector.
I will continue to track the evolution of India as well as cover China’s business affairs in my future coverage, but it is certainly interesting to see how quickly things are developing in the Indian market.
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Toronto-based Jacqueline Vong is a China market specialist and tracks Asian developments in the marketplace with her editorials. She currently owns a consultancy called Playology International specializing in licensing, franchise management and content development and sales for North America and Asia.
You can reach her @PlayologyIntl or www.playologyintl.com
Josh Punin, of Trade Asia Pac has formed an India Based consulting group. You can reach him at jpunin@toysasiapac.com.au
Steve Reece is the founder of the toy expert consultancy, Kids Brand Insight and part of the ToyTeamIndia venture. For more information visit www.KidsBrandInsight.com
