Taiwanese manufacturers face unfamiliar conditions in India

News: Taiwanese firms like Foxconn, Wistron ,Pegatron and Quanta Computer have come to dominate global electronics manufacturing Industry and have had a very strong presence in China till now. 

But, recently, they have started to shift their base to India as China is facing labour shortages and to cut their overreliance on China. 

However, they are facing some challenges in adapting themselves to the Indian business environment. 

What have been the recent incidents that point out towards this? 

Incidents at Foxconn and Wistron’s plants in India point out at the difficulties the Taiwanese firms are facing in adjusting to the local business ecosystem.

– Foxconn Technology Group, a Taiwanese supplier of Apple is facing labour upsurges due to concerns about food safety and accommodation standards. More than 17,000 people work at the facility, and in mid-December hundreds of workers contracted food poisoning. More than 150 were hospitalized. 

An apple investigation has found that food sanitation and employee accommodation is below the optimal standard.  

– A year earlier, workers at a Wistron plant near the tech hub of Bengaluru ransacked that factory after being fed up with delayed and underpaid wages. 

How are Chinese and Indian business environment different from each other?

India has its own unique traits and characteristics which are as follows- 

Language and cultural barriers: Common language and successive leaders’ pro-business policies in China made it easier to set up production units and hire workers there. In India, they face language barriers, cultural differences and changed political set up. 

Infrastructure: India lacks the infrastructure Taiwanese companies are accustomed to relying upon when setting up local facilities. 

Management style: Taiwanese businesses generally used their own executives in China, while in India they will have to increasingly rely on local leaders to set up and run operations. This requires adequate training and support so that they can mix the rigid Taiwanese approach to operations with a more relaxed worker culture found in India. 

Local governments: Local governments in China will mostly side with companies over workers. That’s less likely in India, where leaders need voter support at election time. 

Time availability: When they were setting their plants in China the Taiwanese companies faced similar challenges like in India, but then they had decades to adapt to the local landscape and the demand was also low. 

Source: This post is based on the article “Taiwanese manufacturers face unfamiliar conditions in India” published in Livemint on 4^th Jan 2022