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Does China Beat India For Sourcing, Hands Down?

By Dan Harris and Steve Dickinson

Yesterday, we did a recommended reading post on a China Sourcing Blog post comparing India and China for sourcing, using statistics to do so. We very quickly received a comment from Joel Waldbaum making very clear that sourcing product from China is far superior and far cheaper than sourcing product (or really anything) from India:

Having lived in, and sourced from India for 30 years, and now China, for the past 5 years, I strongly disagree that India is in any way, comparable to China. The "numbers" do not really tell the true story, at all. Logistics is a joke in India. It takes 3 days to unload/load a container ship in Mumbai. I have "lost" containers put on a train in New Delhi which somehow are missing when the train arrives in Mumbai. Yes, containers disappear from trains. The Mumbai High Court has ruled that proven theft (proven in court) is not sufficient grounds for firing a worker. To close a company/factory with more than 90 workers requires government permission, which has till date, never been given. India manufactures what China, for a variety of reasons, chooses NOT to manufacture: too labor intensive, too short production runs, primarily for the domestic Indian market where there are tariffs protecting the Indian manufacturer. The real cost of Indian labor is 2-3 times the cost of China labor when you take into account productivity, Indian workers need for excessive/extensive supervision, and the costs of benefits. This is why Chinese construction companies choose to import Chinese labor to India, for projects they are working on in India, and why, till very recently, there were 40,000+ Chinese workers in India doing construction. I am fully aware of the problems of sourcing in China. Nevertheless, India's costs and logistics make it the second choice for any product currently available in China. With the poor response to call centers in India by American consumers/customers, I also expect China to shortly (as English in China becomes more widespread) become the destination of choice for out-sourcing. Similarly with software development. I have been waiting for 20 years for India to actualize its potential. It has not, and I believe it will not. China has, and will continue to grow market share from both developed, and other so-called undeveloped countries. If you look at what India is currently manufacturing, and who are the customers (most domestic), and compare this to what China is manufacturing, a truer picture of where you should source emerges. Walmart is not stupid. They only started sourcing in India, so that they could get permission to open stores in India, which has still not occurred. Nor have their own targets been achieved. There is not much worth buying, in comparison to China.

Because my firm does no India work, I have no direct information on sourcing from India and very little indirect information. So is Waldbaum right in claiming China is far superior toIndia for sourcing? Is India really that bad? I will say that virtually none of my clients have even mentioned India as a potential sourcing country.

Full post as published by China Law Blog on February 14, 2010 (boomark / email).