After Japan, now South Korean companies want to move out of China
On April 7, 2020, Japan reported it is ready to spend 2.2 billion dollars to help companies to shift out of China and now South Korea is looking to move some of its manufacturing units from China to India. China is not just facing skepticism for its lack of cautiousness in handling the Coronavirus (COVID-19) that unfolded in Wuhan but also for under-reporting the extent of the epidemic and causing a devastating effect on global trade. The world has lost faith in China. It’s time for a paradigm shift and the emergence of new trade partners.
South Korea is now considering to pull out its manufacturing units from China and looking at India as a ‘favorable nation’ to relocate. The Korean consulate in Chennai, India has already received requests from its companies in the iron and steel sector, hospitality sector, and few start-ups who want to make this shift from China to India. Yup Lee, the deputy consul general for the Consulate General of The Republic of Korea, said the government of India had shown interest in setting up Posco and Hyundai Steel factories in Andhra Pradesh. Besides the two behemoths, there are several companies which want to come to India. But with COVID, there might be some delays,” he said.
India-Republic of Korea bilateral co-operation since February 1996
India-South Korea relations have been relatively strong. In July 2018, the President of South Korea, Moon Jae-in and the Prime Minister of India, Narendra Modi jointly inaugurated the Samsung Electronics smartphone assembly plant in Noida. The India-South Korea partnership has also seen companies like LG Electronics and Hyundai Motors well-established in India.
India has a chance to replace China as a global economic leader
The coronavirus is expected to cost the global economy up to $2 trillion this year. Once the pandemic is brought under control India will have to participate in rebuilding its economy. It will need to address immediately the incentives to attract more South Korean companies moving out of China. Taking a cue from countries like Vietnam, which provide preferential tax rates and the tax holidays, the Indian government will require to devise a lucrative policy where both countries benefit. HDFC Bank chairman Deepak Parekh already voiced his sentiments about the Indian government readying itself to receive companies that want to get out of China. He said, “We should make it easy for the Japanese to come to India rather than them going to Malaysia, Vietnam or Thailand. States have to take the initiative and offer them 2,000 to 5,000 acres in some special zone where they do not have to look for land or building approvals,”
Make In India
In the post-corona pandemic, India will have to accelerate reforms to remain in the race with countries like Vietnam, Malaysia, Taiwan and Bangladesh, who are looking to get a piece of the Chinese pie. It’s time for the country to seize this opportunity to emerge as a viable alternative to China. ‘Make in India’ has to be a success story and not just a government initiative. From IT, pharmaceuticals, electronics, consumer appliances, electric vehicles, footwear and toys, India has the hands, the head and highways to support global industries. If India succeeds, it will be able to bring its economy back on track sooner than later. Prime Minister Narendra Modi’s timely lockdown in India has already won him respect among world leaders. The world is looking at INDIA!