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TNN | May 10, 2012, 04.04AM IST
MUMBAI: The share of 'Made in China' goods in India's consumption economy has eased as the dragon struggles to keep its cost-competitive manufacturing story going. China's overwhelming grip over supplies of stationary products, fabrics, toys and lighting products started loosening over the past year.
Consider this: ITC sourced 100% of its stationery products like pencils, geometry boxes and scholastic products marketed under Classmate brand from China. But imports will fall below 10% this year as the Indian behemoth moves sourcing back to India in a big way.
Chinese products had over 70% share of the domestic toy market, which is falling to about 50%. Fabric sourcing from China by the local garment makers declined 10% in the last 12 months. It's share of the lighting sector - where the market for CFL bulbs was mostly developed by Chinese imports a decade ago -has dropped to 15% from over 50% in 2007. Indian manufacturers are sighting gains even as China's factory prowess weakens on the back of an appreciating yuan, rising inflation and soaring wages in the wake of labour reforms in recent past.
Indian companies are bringing production back home, or taking it to other competitive markets - part of a broader global phenomenon playing out for almost two years now. "We are developing vendors here now for all our products which we were earlier importing.
Imports will now be restricted to select premium products. China used to cater to the world's stationery requirement. Now, some of it will come to India. It is already moving into Vietnam," said Chand Das, chief executive of ITC's education and stationery products business.
China's discomforts present a significant opportunity for local manufacturers to serve a robust domestic demand as well as book a pie of the global sourcing from transnational corporations. Funskool, India's leading toy company, has been approached by global biggies to source production from its Goa plant to offset rising costs in China. "All the big players are looking at India for manufacturing support. While Indonesia has already got many orders, some are expected to come to India as well," said John Baby, CEO, Funskool (India), a joint venture between MRF and Hasbro of USA. "Two to three companies have approached us and are doing audits at our factory. We will be able to add capacity if we get these orders," said Baby.
The story is similar for the lighting industry where the Chinese glow is dimming fast. The 350-million-unit CFL bulb market in India has witnessed dwindling share of imports from the neighbouring giant. The evolution of the lighting industry in the past decade, from incandescent light bulbs, which did not require much of electronics, to LED lamps, which are entirely made from electronic ballast technology, has encouraged indigenization of the lighting industry.
"Chinese CFLs initially flooded the Indian market. But eventually they failed to create an impact because they couldn't meet Indian market conditions where power situation varies in different parts of the country," said Arun Gupta, managing director, NTL Electronics India, one of the largest electronic manufacturing companies in lighting in India. Gupta also argued that electronics, driven by intellectual properties, has become the backbone of lighting industry, where China has lagged behind.
But Chinese supplies have made inroads into India's infrastructure and capital goods industry at a time when its hold over the consumer products market has weakened. Anil Ambani's Reliance Group, for instance, has struck major equipment sourcing contracts in China for its power and telecom businesses in return for cheaper loans. Chinese equipment makers have also backed telcos like Bharti Airtel in their recent 4G roll-outs.
China imports losing ground in India - The Times of India
MUMBAI: The share of 'Made in China' goods in India's consumption economy has eased as the dragon struggles to keep its cost-competitive manufacturing story going. China's overwhelming grip over supplies of stationary products, fabrics, toys and lighting products started loosening over the past year.
Consider this: ITC sourced 100% of its stationery products like pencils, geometry boxes and scholastic products marketed under Classmate brand from China. But imports will fall below 10% this year as the Indian behemoth moves sourcing back to India in a big way.
Chinese products had over 70% share of the domestic toy market, which is falling to about 50%. Fabric sourcing from China by the local garment makers declined 10% in the last 12 months. It's share of the lighting sector - where the market for CFL bulbs was mostly developed by Chinese imports a decade ago -has dropped to 15% from over 50% in 2007. Indian manufacturers are sighting gains even as China's factory prowess weakens on the back of an appreciating yuan, rising inflation and soaring wages in the wake of labour reforms in recent past.
Indian companies are bringing production back home, or taking it to other competitive markets - part of a broader global phenomenon playing out for almost two years now. "We are developing vendors here now for all our products which we were earlier importing.
Imports will now be restricted to select premium products. China used to cater to the world's stationery requirement. Now, some of it will come to India. It is already moving into Vietnam," said Chand Das, chief executive of ITC's education and stationery products business.
China's discomforts present a significant opportunity for local manufacturers to serve a robust domestic demand as well as book a pie of the global sourcing from transnational corporations. Funskool, India's leading toy company, has been approached by global biggies to source production from its Goa plant to offset rising costs in China. "All the big players are looking at India for manufacturing support. While Indonesia has already got many orders, some are expected to come to India as well," said John Baby, CEO, Funskool (India), a joint venture between MRF and Hasbro of USA. "Two to three companies have approached us and are doing audits at our factory. We will be able to add capacity if we get these orders," said Baby.
The story is similar for the lighting industry where the Chinese glow is dimming fast. The 350-million-unit CFL bulb market in India has witnessed dwindling share of imports from the neighbouring giant. The evolution of the lighting industry in the past decade, from incandescent light bulbs, which did not require much of electronics, to LED lamps, which are entirely made from electronic ballast technology, has encouraged indigenization of the lighting industry.
"Chinese CFLs initially flooded the Indian market. But eventually they failed to create an impact because they couldn't meet Indian market conditions where power situation varies in different parts of the country," said Arun Gupta, managing director, NTL Electronics India, one of the largest electronic manufacturing companies in lighting in India. Gupta also argued that electronics, driven by intellectual properties, has become the backbone of lighting industry, where China has lagged behind.
But Chinese supplies have made inroads into India's infrastructure and capital goods industry at a time when its hold over the consumer products market has weakened. Anil Ambani's Reliance Group, for instance, has struck major equipment sourcing contracts in China for its power and telecom businesses in return for cheaper loans. Chinese equipment makers have also backed telcos like Bharti Airtel in their recent 4G roll-outs.
China imports losing ground in India - The Times of India
