There is a perception that labor in China is cheapest, but leading strategist George Zhibin Gu (in his new book: China and the new world order) is on the opinion that labor in India is by and large 50% cheaper than China — but that still China rules. And he answers the question as to why that should be.
In his book he says that although India may be the world leader in outsourcing IT and software services field in manufacturing China is by far the clear winner.
Firstly, when India does not have a logistics chain complete with infrastructure in place. China, on the other hand, over last 26 years, has built up a complete logistical business chain.
He uses an example the logistics of consumer electronics being made in Guangdong where you have available more than 10,000 component makers. Sony alone has more than 3,000 China based component makers.
The suppliers may be multi-nationals but they are all in one province with short and effective — compared to India — logistical chains in place. The book suggests that this kind of effectiveness and efficiency which you find in China does not, as yet, exist even in a basic form, in India.
George Zhibin Gu has, for the past two decades, been an investment banker and business consultant. His work focuses on helping international businesses to invest in China and helping Chinese companies to expand overseas.
Source: Cleveland Indy Media Center
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