World’s China plus One business strategy spells advantage for India

The Covid pandemic has shown limitations of global markets in terms of the health infrastructure of countries, supply chain disruptions, or dependence of the West on China. Amid pathbreaking Covid disruptions, companies attempted to innovate their business models.

One such business model is China Plus One Strategy. It refers to diversifying the investment from China in the business sector and looking for alternative destinations.

Although such model was in place by Japan and the US since 2008, it furthered much more during the pandemic.

During the Covid pandemic, countries across the world began to look within themselves.

What forced companies to look beyond China?

China’s now repealed zero Covid policy, US-China trade war, crisis of Alibaba owner Jack Ma, ban of several Chinese smartphone applications by India and the US, Chinese stringent data privacy law, espionage charges against country’s nationals, and Beijing’s assertive stance on Taiwan are a few reasons that forced multinational companies to look beyond China.

Which countries emerged as alternatives?

To support world’s ever-growing demand of machinery, automobiles, transport and electrical equipment countries like India, Vietnam, Thailand, Mexico, Taiwan, Malaysia filled the vacuum. In the long run, the economic stars are aligned in favour of India. India possess a low cost production, conducive business environment, and incentivising government policies to support the companies.

In the sectors such as semiconductors, chipsets and other electronic products, India has the potential to do wonders. 

“We are well-positioned to become a trusted global partner under China-plus-one strategy and hopeful of becoming part of Global Value Chains (GVCs) for logic semiconductors, chip sets and other electronic products,’‘ India’s Union Minister of State for Electronics and Information Technology Rajeev Chandrasekhar said. 

For instance, nearly 92 per cent mobile phones sold in India in 2014 were imported compared to 2020 when 97 per cent of mobile phones were manufactured in India. 

Indian campaigns such as Make In India and Production Linked Incentive (PLIs) have geared up the transition. As per the official portal of Make In India, 1,305 Japanese companies are registered in India like Suzuki, Honda, Sony and Panasonic. Countries like US, Japan, United Arab Emirates, Germany, and France have heavily invested in the country. 

Apart from electronics, pharmaceuticals sector has emerged as India’s stronghold in recent years. As ‘Pharmacy of the World’, India is among world’s ten most attractive sectors for the foreign investment in pharmaceutical sector. About 20 per cent of the global exports in generic drugs are met by India. India’s role in supplying medical consignment to different countries during Covid pandemic received laurels worldwide, reflecting country’s intent as well as the potential to meet global demand to be a reliable spot of global manufacturing.

(Disclaimer: The views of the writer do not represent the views of WION or ZMCL. Nor does WION or ZMCL endorse the views of the writer.)

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