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Is it over for consumer brands & China?

Is it over now for consumer brands & China?

We Built This City

A lot has been said and written about the Chinese ban. So let’s put the “ban” in perspective. Over 14% of India’s total imports for FY 2020 (till Feb. 2020) came from China which is the highest share among India’s importing nations. We source over 90% of mobile phone parts, and almost two-thirds of imports for electronics products, organic chemicals, machinery and automotive parts from China. In the production of automobiles, even one missing part can halt the entire manufacturing process. What we are looking at is an Indian economy that relies heavily on Chinese production.

Now let’s look at purely imported products from China. In May, when the Indian Home Ministry announced that paramilitary stores would sell only locally manufactured goods, it created a firestorm of sorts. Some of India’s top consumer brands were affected by the new policies. It included Bajaj Electronics, Colgate Palmolive and Dabur which have decades-old legacies rooted in India. Naturally, there was blowback, and the government had to backtrack on its policy. 

To counter the reliance on China, PM Modi devised the Atmanirbhar Bharat campaign with “Local is Vocal” as the new catchphrase. But the market was already ahead of the new policy. When the lockdown was clamped down in late March, local brands did better than popular, national brands. Their nimble supply chains, along with reliance on digital technology and retail analytics, enabled them to gain a foothold in the retail market quickly.

Still, all the drama makes us wonder at the long term impact of the China ban. India’s manufacturing units have a long way to go before they can catch up with the superior capacity, cost and quality benefits offered by their Chinese counterparts. Even if the government invests in the ecosystem, there are endemic challenges that the best of policies have been unable to fix. Unfortunately, multinationals and consumer brands which rely on their China-produced white labelled products to power their product portfolios are facing the maximum disruptions. 

These are challenging times, and our stand has always been that the downturn is the best time to look at operational improvements through digital transformation. In an article titled “How to survive a recession and thrive afterward,” the Harvard Business Review cites many studies to support its stand. Companies that survived multiple recessions were resilient for their preparedness and for investing in new technology.  

Write to us about your challenges, technological transformation plans and send pictures of funky China-made products to marketing@mobisy.com

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