Source: FT | Insular India’s exporters will struggle to fill Chinese shoes | Financial Times (ft.com)

China plus one, minus China

Multinational corporations seeking to reduce their geopolitical risks and vulnerabilities are increasingly adopting a "China plus one" strategy for production. This approach involves diversifying their manufacturing operations by establishing an additional production base in a country outside of China. However, with growing tensions between China and the US, many multinationals are now taking an even more cautious approach by adopting a "China plus one, minus China" strategy. This approach involves reducing their reliance on China altogether, either by shifting their production to other countries or by reshoring it back to their home countries. By doing so, companies can mitigate the risks associated with geopolitical tensions and safeguard their supply chains from potential disruptions.

Foxconn to build $700 million iPhone plant in India

Foxconn Technology Group, one of the largest manufacturers for Apple's iPhone, has announced plans to invest up to $700 million in building a new plant in India. This move is part of a larger effort to increase production capacity in the country while simultaneously reducing reliance on facilities in China. The shift in production is largely driven by escalating geopolitical tensions between the United States and China. By diversifying production operations, Foxconn hopes to mitigate risks associated with supply chain disruptions and reduce its exposure to the ongoing trade disputes between the two superpowers. The move also represents a significant investment in India's manufacturing industry, which has been gaining momentum in recent years as an attractive alternative to China for global corporations.

India and other countries taking advantage

India considered but ultimately did not join the RCEP (Regional Comprehensive Economic Partnership) trade agreement, as it was worried about competition from China. Instead, the government adopted a philosophy of Atmanirbhar Bharat ("self-reliant India") and tried to create supply chains within the country for exports to rich markets like Europe. To do this, it implemented domestic subsidies for certain industries and higher tariffs to protect them from foreign competition. However, these efforts have not been successful in building competitive manufacturing. Rising costs in China were already pricing out labor-intensive manufacturing before the Trump-Biden trade conflict, creating opportunities for other countries.