India could become the next major centre for ODM as the world’s attention shifts away from China.
Making America Great Again was Donald Trump’s campaign platform, and it marked the beginning of a shift in American policy towards China. And as a result, U.S. investors and businesses began to examine China’s de-risking, particularly from an economic perspective. likewise scanning potential sources outside.
Then came the Covid era, which not only significantly disrupted the global economy but also made matters worse as some of the bigger economies began to liberalise their business practises.
And if you’re wondering, how?
Well, the demand for ODM increased immediately after the larger economies recovered from the pandemic, and at that precise moment, China’s position in the world changed to one of an anti-Western one because of China’s Zero-COvid Policy, which resulted in an industrial lockdown and prevented the Chinese companies from having an efficient supply chain. The lead time between countries immediately increased as a consequence, and China’s reliability rating plummeted.
By that time, both the US and Europe had to turn to other nations for a supply that would ensure availability and reliability and also make financial sense in terms of price.
Following the US and Europe, numerous other nations and multinational corporations developed the China +1 approach.
So how can India and its producers benefit from the China+1 strategy?
Given the size of China’s exports and the implementation of the China + 1 strategy, India has a significant, if not the largest, opportunity on its hands. However, we must be cautious because in order to receive a piece of the largest Chinese pie, we must understand what China did well in the first place. If we dig deeply into this topic, we will discover factors like:
lower price
Excellent calibre
Dependability and prompt delivery
Due to this, big international corporations felt at ease partnering with Chinese businesses.
Therefore, Indian companies must evaluate them and also break out of their shells because, up until now, a sizable portion of Indian firms focused on the domestic market for their piece of the action, and export only entered the picture when they had surplus goods. To give their international clients the assurance that they can produce at higher scales, they will now have to view this as a distinct business opportunity, and they will have to invest exclusively in expanding their export capacity. This would make both economic and business sense to them.
A global supply chain for China wasn’t built in a day, so to acquire credibility, “Quality of Work” will need to meet international standards. However, there are challenges in doing so, so Indian companies will need to prepare themselves.
Along with timely delivery, Indian businesses will have to put in a lot of effort to comprehend the various quality benchmarks and expectations of international customers in various nations.
Additionally, they might need to take additional measures to guarantee their future export destinations an uninterrupted supply, even if it means failing to satisfy their local demand.
Last but not least, India’s economy is growing faster than any other optional nation, which the larger economies would be looking to as their source for the ODM. For these reasons, Ekkaa Electronics believe that India has the potential to not only become the next global hub for businesses around the world but also to replicate the success of China.
(The author is Mr. Sagar Gupta, director of Ekkaa Electronics and the views expressed in this article are his own)
