In a recent panel discussion at the DIGITIMES Supply Chain Summit 2023, industry leaders explored the ascension of the Global South and the transformative effects of the China+1 trend, focusing on India's burgeoning role. The panel featured Colley Hwang, Chairman and President of DIGITIMES, Ajai Chowdhry, Co-founder of HCL and Chairman of EPIC Foundation, and Santosh Pai, Legal Partner at Dentons Link Legal.
India's role and evolving supply chains dynamics
When speaking of the drivers that led to the rise of Global South, Ajai Chowdhry underscored the role of India in the context of the "China plus one" trend. Driven by favorable policies, Chowdhry believes that India's growth in the past few years positions the country as an attractive alternative for global companies. The need for trusted partners and resilient supply chains, catalyzed by geopolitical shifts, is prompting companies worldwide, not just in Taiwan, to reconsider their supply chain strategies. Chowdhry accentuated that this recalibration towards the Global South is frequently instigated by the customers of suppliers, prominently, American and European corporations.
Santosh Pai provided an alternate perspective, rejecting the idea of India competing directly with China. Instead, he positioned India as a distinct model with a unique democratic system, emphasizing the convergence of political values with global supply chain needs. Pai views India's growth as more equitable and sustainable, benefiting a broader global population.
Market opportunities and sustainable designs
Discussing the promising markets in South Asia, the Middle East, and Africa, Ajai Chowdhry highlighted the low penetration of certain products like PCs in these regions. Given India's proximity to these areas, he envisions substantial opportunities for Taiwanese companies within India.
Ajai emphasizes the advent of a new market as a catalyst for innovative product designs. "With a fresh market comes a unique chance for product innovation," notes Ajai. He posits that the recent integration of a repair policy is pivotal for sustainability trends. This entails designing electronic products with repairability at a competent level, contrasting with the traditional complexity of returning the entire product for repairs. This paradigm shift not only ensures products stay relevant for a more extended period but also facilitates their widespread circulation in the Indian market and the aforementioned regions.
India's infrastructure and mutual collaboration with Taiwan
Colley Hwang addressed concerns about India's infrastructure, citing significant improvements. He highlighted the creation of smart cities, improved transportation infrastructure, and collaborations with global companies in high-tech cities like Pune. He stressed the need for a more accurate understanding of India's present state, stating that outdated perceptions about infrastructure might hinder potential collaborations.
Hwang believes the industry scale model of India is more similar to South Korea than to Taiwan. This leaves room for plenty of comprehensive and complimentary opportunities for the two to collaborate. "Taiwan only has a 23 million population, it is impossible for us to handle everything," says the Chairman of DIGITIMES.
Looking beyond manufacturing, Hwang identifies potential collaboration in the data center market. He underscores the significance by stating that, "Giga bytes are also goods." Ajay agrees with Hwang and suggests the market is not brand-orientated, which leaves an opening for unbranded products in Taiwan to tap into the data center market.
However, Hwang also stresses the importance of India treating Taiwan on a more equal footing for mutual benefits. He notes India's tendency to position itself as the larger market in discussions with Taiwan, perceiving that Taiwan needs India more than vice versa. Furthermore, he underscores that most Taiwanese enterprises are Small and Medium-sized Enterprises (SMEs), indicating that without the prospect of significant profit or Return on Investment (ROI), these entities are unlikely to venture into India. Colley contends that, without Taiwan, it would be impossible for India to establish its electronic product manufacturing sector.
Contrasting perspectives and India's aspirations for Taiwan
In response to Hwang's comments on SMEs, Ajai Chowdhry urged a shift in mindset for Indian officials to move away from traditional concerns purely about land sizes. He proposed the idea of flooded factories, providing a plug-and-play environment, reducing setup time, and enhancing ROI. He believes that this move would create more opportunities for Taiwanese SMEs to come to India, which he believes would help bolster India's engineering and design capabilities.
While Pai concedes Colley's points, he asserts that India envisions grander prospects for Taiwan than Taiwan envisions for itself, echoing sentiments previously shared with DIGITIMES Asia. He queries the status quo: "If Taiwanese firms can fabricate all phone components, why limit themselves to Apple?" Going beyond mere manufacturing for export, he aspires to see Taiwanese enterprises delve deeper into India's domestic market and leverage existing trade agreements with other nations. He contends that this will not only fortify their trade architecture, but also open avenues to markets previously beyond their reach.
In response to Hwang's remarks on ROI and profits, Pai has adopted a long-term perspective by stating that, "ROI shouldn't be solely driven by customers or contracts." In the context of the China+1 paradigm, he envisions India evolving into a hub for emerging markets, offering Taiwanese companies substantial benefits from India's prospective growth.
Regarding Hwang's observation on India's reliance on Taiwan for manufacturing, Pai acknowledges that while some of India's ambitions hinge on Taiwanese support, the robust double-digit growth India is experiencing across multiple industries is bound to attract entrepreneurship from various corners of the globe.
Globalization 2.0: the need for alternatives
Santosh Pai concluded the panel by placing India in the context of "Globalization 2.0," where diversified supply chains are essential. He highlighted India's uniqueness in offering a significant market and a workforce in one place, making it an attractive destination for exports.
In essence, the panelists painted a picture of India not as a mere competitor to China but as a unique player with its own set of opportunities and aspirations, ready to contribute significantly to global supply chains and manufacturing in the years to come.