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Why India is losing out to Vietnam in attracting companies quitting China



Our Special Correspondent

 NEW DELHI, October 15: In 2020, Chinese auto and electronics major BYD, Apple’s largest contract manufacturer of iPads, was looking to shift some of its capacity from China to India. But the move was shelved after geopolitical tensions erupted between the two countries, and India introduced stiff foreign direct investment (FDI) rules for Chinese companies.Now, two years on, BYD has just started rolling out iPads from Vietnam. It has invested $268 million to set up a new factory with a capacity to churn out 4.33 million tablets a year.

 Vietnam’s gain is India’s loss. The two Asian countries have been aggressively wooing global companies and their suppliers to shift from China. Growing US-China geopolitical tensions and supply chain disruptions due to sudden closures of factories to combat Covid-19 have impelled many tech players to explore other investment destinations.

 India has grabbed one jewel in the crown — Apple Inc. Its vendor Foxconn recently started assembling the latest iPhone 14 within a few days of its global launch. And if everything goes according to script under the production-linked incentive (PLI) scheme, India will account for 12 per cent of the global production value of iPhones, which could go up to 20 per cent by FY26.

The PLI scheme, meant primarily to reduce the cost disadvantage between India and Vietnam for making mobiles, offers an incentive of 4-6 per cent on the production value for five years. But sources in the know clarify that Apple Inc is not shifting manufacture of its AirPods to India.All in all, though, Vietnam is way ahead in the game. Apart from grabbing iPads, The New York Times reported that Google is also shifting the assembly of its latest Pixel 7 mobile phones to Vietnam from China. Reports had said India was also in the reckoning.

 Hanoi has also bagged Chinese mobile player Xiaomi, which is contract-manufacturing phones with Chinese DBG in Vietnam for exports to Thailand and Malaysia. Microsoft is manufacturing Xbox consoles there. In the non-electronics space, toy maker Lego, which was scouting for a factory to cater to growing Asian demand (it has a factory in China), opted for Vietnam recently where it has committed an investment of $1 billion.

 Vietnam’s crowning glory has been Samsung. Since 2008, the Korean chaebol has invested a staggering $19 billion in the country shifting mobile capacity from China. It recently announced an additional $3.3 billion for semiconductors. As much as 50 per cent of its phones are made in Vietnam and 2021 annual exports were $65.5 billion (three times what Apple promised to manufacture in India in FY26).The new battleground for the two countries is in PCs, laptops and tablets as global brands look to hedge against their over-dependence on China: 75 per cent of all laptops are made in that country.

 Vietnam’s share in this space might be just 2 per cent (contract-manufacturing for Dell, Amazon and Google, say reports) but it is furiously licensing contract manufacturers to create capacity and become a hub for the world here, too.To this end, Hanoi has signed an agreement with Foxconn recently to invest $300 million to assemble laptops and tablets, and has given permission to Wistron last year to make computers and peripherals. Nikkei reports that Microsoft might start producing its Surface line, including notebooks and desktops computers.

 India’s answer to woo laptop (the bulk of which are imported from China), PC and tablet makers has been through a Production-Linked Incentive (PLI) scheme for IT products, which has failed to take off. Only around four of the 14 eligible players, domestic and global, have succeeded in meeting their production targets, and they say incentives (an average of 2 per cent) are too low and only for four years.

The electronics ministry is now reworking the plan to cater better to the requirements of global players, who have shown interest in shifting capacity from China if the incentives are attractive enough.Yet the big challenge that India faces — which Vietnam does not — is in setting up a supply chain, which both in mobile and IT products is dominated by Chinese manufacturers. But India’s Foreign Direct Investment (FDI) policy has effectively barred them through the automatic approval route, meaning Chinese investment proposals require government scrutiny. Even then, few have been granted permission over the past two years.

 For instance, 10 per cent of Apple’s top 200 vendors are based in Vietnam but the bulk of them are from China. In India, Apple has around 12 global suppliers but only three of them are Chinese firms who entered before the FDI restrictions were imposed. As companies like Apple take a big jump in production from this year, higher value addition is possible only if their Chinese vendors are allowed in. India wants value addition upped from 15-20 per cent to 35 per cent in the next four years. Hanoi imposes no such restrictions; locational proximity enhances its attractiveness.

 Vietnam has two other key advantages — far lower input tariffs than India, and the ability to leverage its plethora of free trade agreements (FTAs) that allow zero duty entry for exports.A preliminary study being undertaken by global companies points out that average most favoured nation tariffs for mobile phones and its supply chain and selected electronics products for 122 products is at around 9.9 per cent in India compared to 5.7 per cent in Vietnam.

 The other problem, say companies, is that unlike Vietnam there is constant fear of differing interpretations and wrong classifications, with the revenue department suddenly raising demands or even accusing global players of round tripping. “There is no pre-consultation and advance authorisation like in Vietnam. Once demands have been made, the only way out is litigation,” said a senior executive of a global electronics company.

 Critically, Vietnam has also leveraged its FTAs with over 56 economies that have helped suppress tariff barriers and make it a potential supply chain strategic hub. For instance, its recent FTA with the European Union has lifted tariffs on 85 per cent of Vietnamese goods. India, meanwhile, has abstained from the most consequential of FTAs — the Regional Comprehensive Economic Partnership (RCEP).

 Of course, India has the advantage of an abundance of skilled labour available at still lower wages. Vietnam’s wage for workers is half of that of China, where rising wages have become a barrier to investment. But India’s worker wages are still a third of that of China, says an executive of a contract manufacturing company. That apart, Vietnam’s much smaller population has a limited number of skilled workers.But most global players say that this one advantage is not enough. Vietnam has much more flexible labour laws that partly neutralise the advantage. Clearly, India will need much more than cheap labour to leverage global corporations’ China Plus-One strategy.

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New building extension for William Angliss Institute @ SLIIT



The William Angliss Institute @ SLIIT, a joint venture between William Angliss Institute, Melbourne and the SLIIT campus, Malabe, recently expanded their footprint in Sri Lanka by declaring open a new building extension with the participation of six Australian Board Members of the William Angliss Institute. Chairman and board members of the Sri Lankan franchise and other distinguished invitees too were present at the event. Judith Slevison – Board Secretary, William Angliss Institute, Australia declared open the building by cutting the ribbon, following which the distinguished guests were ushered to the Hot Kitchen, situated at the third floor of the institute where they lit the traditional oil lamp in accordance with the local customs.

Addressing the students at the Institute, Nicholas Hunt – Chief Executive Officer, William Angliss Institute @ SLIIT and Anuk Weerasinghe – Managing Director spoke of the exciting opportunities before them as tourism across the world rapidly recovers from the pandemic. The contributions of Chairman Errol Weerasinghe, Management and Staff of the William Angliss Institute @ SLIIT were also lauded by Hunt and Weerasinghe. Following the opening ceremony, the guests were taken to the second floor Patisserie Kitchen where they were served with Sri Lankan morning tea. The event concluded with a celebratory lunch for all guests, that followed a tour of the building. The new Building Extension contains two kitchens (Hot Kitchen and Patisserie) that are equipped with latest European culinary equipment.

Other facilities include three classrooms, larger food stores, and modern washrooms/ changerooms. The institute is currently putting the last touches to a Roof Top Training Bar/ Student Recreation area. The new facilities enhance the teaching capacity of this center dedicated for Hospitality, Culinary Arts, Tourism Studies, and Events, as well as the quality of student life, which in turn helps the institute reach its objective of creating career ready graduates.

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Dialog enables Digital Stock Trading on CSE via its Genie Fintech



=First platform in Sri Lanka to enable end-to-end digital onboarding and trading

Sri Lanka’s premier fintech app, genie, powered by Dialog, has launched an innovative feature that allows its users to set up a Central Depository Systems (CDS) account, add money, place orders to buy and sell stocks on the Colombo Stock Exchange (CSE) and withdraw funds from their trading account maintained with the broker, and manage their stock portfolio, all from the convenience of their mobile phone. Softlogic Stockbrokers Pvt Ltd [SSB] is the first broker to partner with genie in providing these brokering services within the app.

Customers can trade in shares listed on the Colombo Stock Exchange (CSE) by using the buying and selling features on the Genie app during market hours and also they can place orders during off-market hours. Any trades input to genie after the market is closed will be placed on the CSE order book on the next trading day. Genie provides customers with simple and easy input screens to place the orders to buy and sell stocks by entering the price and quantity of each trade.

“As Sri Lanka’s premier Fintech app, we are pleased to have contributed to the widening of the retail investor base in Sri Lanka and to enable investors to gain access to the stock market and start investing and trade in stocks.” Renuka Fernando, Group Chief Digital Services Officer of Dialog Axiata PLC said. “We are confident that as we widen access, there will be better understanding and participation in our Capital markets. We will continue to foster good investment habits and educate our customers with easy access to market information. Self-directed investing is the logical extension of the genie platform which aims to democratize financial products and wealth management”, she further stated.

“We are pleased to have partnered with genie, Sri Lanka’s premier Fintech app, where customers can experience end to end digital journey from opening a CDS account to trading. We look forward to work with Genie in expanding our reach in the digital economy of Sri Lanka, whilst providing the best customer experience.” Dihan Dedigama, Director / Chief Executive Officer, Softlogic Stockbrokers said.

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Unilever Sri Lanka wins Youth Focus Corporate Award



Recognized for its commitment to empower Sri Lankan youth at the New Generation Awards 2022

Colombo, November 25, 2022: Unilever Sri Lanka was recently honoured with the Youth Focus Corporate Award at the New Generation Awards 2022, for making the biggest youth impact in the country during 2021-2022, as a corporate entity. The event was organised by the New Generation Chapter of Women in Management (WIM), in partnership with the National Youth Services Council in Sri Lanka. This was the only corporate award category presented at the event.

The New Generation Awards aim to identify, nurture and groom young, talented Sri Lankans and celebrate their contribution to the nation. The event comprised of over 50 Awards being presented across 20 award categories, including awards for schoolchildren, young entrepreneurs, schools, institutions and corporates.

Commenting on the award, Ananya Sabharwal, HR Director of Unilever Sri Lanka said “We are truly humbled to receive this award in recognition of our efforts to upskill the youth of the country. At Unilever, we offer flexible and short-term youth initiatives that cater to undergraduates. So, by the time they graduate, they have already gained vital skills and corporate exposure that are necessary to lay a strong foundation for their career. Our talent scouts who are our own employees collectively contribute to Unilever’s youth investment by volunteering their time to conduct campus sessions and share experiences with undergraduates. This kind of real-time industry experience sharing, really enables youth in deciding the kind of career they want to have”.

Unilever Sri Lanka has committed to empower and equip 100,000 Sri Lankan youth with essential skills by 2025 and has already enabled 30,000+ local youth to become more employable over the last five years through its campus engagements, strategic industry – academic student partnerships and career opportunities. Some of its youth initiatives include its SPARKS Student Ambassador Programme which invites undergraduates from top Sri Lankan universities to become Unilever ambassadors within their universities; the Unilever Challenge which is a real time brand centered case study competition that gives first-hand experience in working with leading brands and building disruptive thinking; the Unilever Leadership Internship Programme which offers internship opportunities to undergraduates across all functions; and many others. It is noteworthy to mention that this year, 48% of the company’s contractual employees were absorbed into the management cadre.

The company has also partnered with John Keels Holdings and London Stock Exchange to launch ‘Fast-Track’, a cross-industry Summer Internship for Sri Lankan students studying locally and abroad; and has partnered with CIMA, the Sri Lanka Institute of Information Technology (SLIIT), General Sir John Kotelawala Defense University (KDU), AIESEC Sri Lanka and Gavel clubs, to help support dynamic capability building in Sri Lankan youth. (Company news release)

About Unilever

Since its inception in 1938, Unilever Sri Lanka has established itself as one of the largest fast-moving consumer goods (FMCG) companies in Sri Lanka. Its current product portfolio includes 30 market leading brands in categories such as Home Care, Personal Care, Beauty & Wellbeing and Nutrition. 96% of its products are manufactured locally, in compliance with the strictest manufacturing standards.Over the past 84 years, Unilever has been deeply rooted in Sri Lankan society, curating a landscape that preserves and nurtures the true Sri Lankan way of life. Enhancing the livelihoods of the communities it operates in, will continue to be at the forefront of this effort as it continues to set industry standards.

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