Just days after unveiling plans to build a $5bn factory in western India, Taiwanese electronics maker Foxconn yesterday underlined the scale of its Indian ambitions by signing a tie-up to assemble smartphones for China’s Xiaomi at a second recently opened facility in the south of the country.
Foxconn’s plans have caught attention both for their scope and speed. Anxious Indian politicians worried for years that they might never be able to entice global companies to set up the type of huge, labour-intensive factory that Foxconn made famous, and which in turn helped to power China’s economic rise.
But now the company’s founder and chairman,Terry Gou, seems to be in a rush not only to open up new facilities, but to do so at a pace that is set to see India catch up with China and become Foxconn’s second major manufacturing base in Asia — assuming, of course, that his ambitions do not get caught up in the country’s treacherous bureaucracy.
“We’ve had dramas before here when big investors come in, but then often they get stuck,” says Arun Maira, an author and former chairman of Boston Consulting Group in India. “It is great news they are coming with big plans, but other companies may not follow Foxconn in. They will wait and see how far they get.”
Much therefore rides on Mr Gou’s success. Prime Minister Narendra Modi has sunk plenty of political capital into a campaign called “make in India”, pledging to end the troubles over land and electricity that have bedevilled earlier manufacturing facilities.
“The PM’s office has been hyperactive on this, they want big landmark projects,” says one government adviser.
Foxconn’s $5bn plant in the western state of Maharashtra, the largest investment ever in a factory in India, is especially eye-catching. It suggests that the Taiwanese group, which is best known for making iPhones and iPads for Apple, could even go on to become India’s
largest foreign investor, if plans for a dozen other new facilities bear fruit.
“India is so big. Maybe in 10 years, we can have a factory in every state,” Mr Gou told Mint, a local business news-paper, yesterday.
The history of similar grand greenfield projects is not a happy one, however. Analysts like Mr Maira point to the travails of South Korean steelmaker
Posco, which began planning a giant $12bn facility a decade ago, only to see it mothballed following interminable land disputes with local tribal people.
Numerous other Indian and global businesses have also come unstuck trying to build everything from aluminium refineries to power stations. Indeed having first entered India in 2006, Foxconn itself ran into difficulties. It was forced to shut a factory last year when Nokia, its client, ceased manufacturing after a row with the government over tax.
Yesterday’s tie-up with Xiaomi, a fast-growing business often dubbed the “Apple of China”, shows that things may be improving, given smartphone makers have historically shown little enthusiasm over local factories.
Plants making electronics goods such as smartphones require lots of land, adaptable workforces and good road and port infrastructure for exporting — all areas where India has struggled. As a result most Indian phones and televisions are imported, typically from China.
Even companies that have begun to assemble locally, such as domestic smartphone maker Micromax, tend to ship components in from abroad.
The hope is that Foxconn’s decision to invest seriously will persuade others to follow, from semiconductor manufacturers and chipmakers to celebrated brands like Apple and Sony. “This is not just a flagship investment but an anchor investment, which could help a full electronic system design and manufacturing value chain to come up in India,” says Rajat Dhawan, a director at consultants McKinsey.
Yet whether Mr Gou’s bold plans can deliver now depend on a range of awkward practical questions, beginning with land.
In Maharashtra, the company has been given a 1,500-acre plot in a local industrial zone, along with help surmounting other bureaucratic hurdles. But other planned factories may not be so fortunate, relying instead on complex land laws, and the vagaries of uncooperative local officials to supply vital resources such as water and electricity.
Workers are the other big problem. Mr Gou talks of hiring 50,000 in Maharashtra, and ultimately as many as 1m in India. Yet India’s labour laws remain highly restrictive, making hiring and firing employees difficult. Working with unions and finding suitably skilled managers will also be tough.
“If this comes off it will be a great, great thing,” says Rajiv Kumar, an economist at the Centre for Policy Research in New Delhi. “But there are so many things which need to come together for something like Foxconn’s plans to happen. Will it work? The short answer is, I will believe it when I see it.”
“如果富士康能成功，那就太好了。”新德里政策研究中心(Centre for Policy Research)的经济学家拉吉夫?库马尔(Rajiv Kumar)说，“但是，富士康的远大计划要想实现，需要同时满足的条件是这么多。富士康的计划能行吗？简短回答是，眼见为实。”