Selecting the right outsourcing destination
Outsourcing as a business strategy has been used by business enterprises all over the world and Asian countries have been their favourite hotspot! While earlier it was only to India they exported their business units to, after the relaxation of their foreign trade laws, China has steadily increased its hold on the foreign market. Multinational electronics and telecommunication companies now source from China, their product components and complementary accessories to reduce the otherwise huge manufacturing overheads they have to pay in their developed homeland countries.
Now, outsourcing or importing resources from foreign lands might seem light a good idea; selecting the right destination country is a little tricky and extremely important for any business to succeed from such practices. Here are some quick comparison points between India and China, the two giant economies ruling the outsource market.
- Ø Labour force- Due to China’s enormous size of around 813.5 million (rough estimate) and 4.3 percent unemployment rate, it lands higher on the ladder as compared to India’s unemployment rate of 10.7 percent among its 467 million population.
- Ø Wage trends and inflation- Here also China scores one point more as it has cheaper labour accessible and lower wage inflation rates as compared to its sub continental neighbour. China suppliers fully exploit this aspect for their benefit and provide reduced operation costs to their clients.
- Ø Efficient management- India has more of efficient managers capable both at middle and senior levels whereas China has a shortage of organised administration and needs constant project regulations and stringent quality checks.
- Ø Communication barriers- While Hindi forms the majorly speaking language on the Indian subcontinent; there are approximately 232 million knowing and using English for business dealings. The main language spoken in China is Mandarin which might cause some communication problems while dealing with the employees. However, hiring a china based sourcing agent can help you in this regard.
- Ø Infrastructure- China is again a step ahead of India in this field as it boasts of state of the art infrastructure, power supply, telecommunications and logistics which are a class apart from their Indian counterparts.
- Ø Legal system- And last but not the least, the legal system. Being a British colony in the previous era, India has much more relaxed regulations concerning foreign trade and investments. But recently China has also been implementing various laws and relaxing the stern laws to encourage more foreign trade to support their increasing economy.
So if you are planning to get imports from China to UK, our advice would be to go with the sourcing agents instead of taking things in your own hands as they have more extensive knowledge about the Chinese markets and are accustomed to their culture.