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Supply Chain Diversification
Navigating the challenges of 'friend-shoring' to India
The strategy of mainland China-based companies seeking to establish production hubs in other countries – "China Plus One" – is gaining greater attention year-on-year.
Initially, the motivation behind the strategy was to reduce expenditure by relocating production to countries with lower costs.
However, in recent years, companies have adopted this business model to safeguard their supply chain and export markets, as geopolitical tensions with China have increased.
A November 2023 study by BCG identified India as a notable ‘friend-shoring’ destination, due to its competitive cost structures, large labor pools, growing scale and capabilities across industries, vast domestic market and favorable government incentives. It was this combination of factors which prompted Apple to announce in June 2023 its plans to shift 18% of its global iPhone production to India.
The major challenge facing organizations looking to relocate production to India, however, is that the country is far from homogenous in terms of the availability of appropriately skilled labor and the quality of local transport and technology infrastructure.
Add to this the complexity of customs, regulatory, logistics, and Indian manufacturing supply chain requirements, and it’s clear that organizations need to take a considered, 360-degree approach when assessing opportunities.
A client-centred assessment of opportunities
Via a robust and objective seven-stage assessment, our Supply Chain Diversification to India Partner, Dr Anju Jain, will work with you every step of the way to ensure that your organization is able to optimize the opportunities India offers as a manufacturing and service destination.
1. Client Intelligence
Our process starts with you. By understanding your business model, competitors, target consumers, pricing dynamics, ESG commitments, and other key factors, we will ensure our assessment is rooted in the needs of your organization.
2. Governmental Packages
The Indian government is putting significant investment behind its ‘Make in India’ initiative which was announced in 2014. Given the challenges in integrating national, state, and provincial departments, however, an experienced ‘navigator’ is required to find the way through the bureaucratic maze.
3. Cultural Wisdom
Each state in India has its own language, business etiquette, and customs – and the fit between these and your organization’s requirements must be carefully balanced. Also, if required, we can offer cultural sensitivity training for your executive teams to ensure that integration is as smooth and seamless as possible.
4. Location/Infrastructure
India has one of the world’s largest populations and one of the largest economies to go with it. However, according to the World Bank, its overall logistics infrastructure ranks 38th in the world. Therefore, finding the exact right location for your needs is going to be a key aspect of a successful expansion.
5. Local Partnerships
We will leverage our local networks to identify the local experts and advisors who can help foster the strategic partnerships you will need to optimize your operations in India (including public-private partnerships where appropriate).
6. Talent Acquisition
With a workforce that is comprised of 500 million, India has a vast supply of educated talent at its disposal. Through partnerships with local universities and colleges, we can help you sustainably hire the high-quality talent you will need to drive your business plans forwards. And while China was lauded for its lower labor costs, recent data shows that salaries have nearly doubled in the last 7 years, while India’s salaries remain at a more consistent and highly affordable rate.
7. Regulatory Compliance
From import licenses and export licenses to special operating certificates, we will help you understand what is required of your company based on your operating model in India.