Outsourcing - China and India: Giant Steps in Asia

Until recently, low-wage manufacturing competition from China was seen as the main threat to western economies. Buoyed by heavy foreign direct investment - seventy percent of the country’s exports come from foreign-owned plants - China has been moving fast up the manufacturing value chain.

The World Today
Published 1 January 2005 Updated 12 November 2020 4 minute READ

Dr Gareth Price

Former Senior Research Fellow, Asia-Pacific Programme

Louis Turner

A few years ago, China started to become the dominant world supplier of goods such as microwave ovens, photocopiers and artificial Christmas trees. Now it is producing significant quantities of fairly sophisticated items like memory chips, computers and mobile handsets, and moving into new territory such as telecommunication switching systems. The software for these products might also easily be developed in India where all sorts of services are being provided.

Can these giant economies maintain their advantage?

The growing competitiveness of Chinese manufacturing means that companies are increasingly relying on China as a source of products and components. Sometimes this is achieved through subsidiaries and in other cases by sub-contracting to Chinese companies.

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