Archive for October, 2007

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Is India the future “China” in the making? YES!

12 October, 2007

What a busy month. My industry is synthetic leather and we manufacture and distribute chemical materials, pigments, finished synthetic leather and equipment. We are exploring the synthetic leather markets in Turkey, India, South America and Mexico. We just left Istanbul, Turkey and now we are in India – for the first time.

Investment in synthetic leather manufacture from Taiwan in the late 1980s was one of the first successful industries in China. As the Taiwanese synthetic leather industry grew in China it was only a matter of time before Chinese manufactures developed and grew at a phenomenal pace until China is the global hub of all synthetic leather manufacture. Today China produces about 75~80% of the world’s consumption of synthetic leather. This development of Chinese synthetic leather directly created ancillary industries for raw materials, PVC and Polyurethane (PU) resins, pigments, chemicals, fabric and equipment.

With high quality domestic synthetic leather available Chinese manufactures of shoes, garments, bags, furniture and sports equipment developed rapidly. These industries helped to develop other industries such as other plastic items such as household items, toys and so on. In my opinion the development of the Chinese synthetic leather industry helped China develop in manufacturing as a whole.

India is beginning to find its place in the world. We all know about the Indian IT industry but has anyone wondered why India and not China? Communication! English has no part in Chinese everyday life even though English is required and taught from primary school to university where one must pass an intermediate level English proficiency test (CET Band 4) to graduate one is hard pressed to find someone who can actually put two English words together. (Anyone who has traveled to China is nodding their heads in agreement at this point). India on the other hand was a former British colony and English is part of Indian everyday life. Everyone in India it seems has some English knowledge with most business people quite fluent. China is not deficient in technological skills compared to India but there is no way to communicate at the same level.

China is a maturing market and competition is forcing Chinese manufacturers to look else ware to set up shop. Many Chinese businesses are investing in India and one industry is synthetic leather. China started with PVC synthetic leather – the cheap leather that feels like plastic. Today about 90% of the 430 plus Chinese manufacturers produce PU synthetic leather which can has the look and feel of natural leather. India on the other hand produces PVC leather with only two manufacturers producing PU leather – most for domestic consumption. Therefore India imports higher quality PU leather from China for its demands however this is beginning to change. India is where China was in the late 1980’s a growing industry of higher quality PU leather. This will have the same effect it had in China with ancillary industries developing to meet the demands of the new PU leather industry. With this development other related industries will develop in kind as if did in China. However there is one large difference – India can communicate!

With India developing a manufacturing base as China has there will be rapid shift of foreign manufacturing from China simply by ease of communication. For a foreign company to set up in China finding English speaking qualified staff is a nightmare. Usually one must hire Chinese who are an English major and then train them or if they are lucky they can find qualified Chinese staff who happens to have English as a hobby. This will not be a problem in India as even many factory workers have simple English skills.

Within 20 years the ‘Made in India’ label will be on most items sold in Wal-Mart!

There is much more to add but it is late and I have a meeting to go to in the morning. I hope I can write more, more often.

Cheers