Parsing the Trends in Asian Manufacturing
By Eric Baker, for Thai-Norwegian Chamber of Commerce
Asia is so vast many of its economies are at different points along the development curve. But one common characteristic is that almost every country needs an element of manufacturing if it is to grow.
The 2015 Norway-Asia Business Summit had a session on manufacturing in Asia with speakers from some of the biggest economies to focus on what the challenges are for industry and where the sector can go from here.
Tejpreet Singh Chopra is the chief executive of Bharat Light & Power and the former chief executive of GE in India. His primary concern is innovation in India.
“The biggest challenge at GE was the lack of a foundation in India,” said Mr Chopra. “I had to go to GE and lobby them to set up shop in India instead of running it from the US because the needs are so different here than in the US.”
“GE wanted to focus on technology, not creating a foundation. So four and a half years ago I decided to leave GE so we could try to solve the problem ourselves. Our company sets up wind and solar generation around India.
“India suffers at traditional innovation, but it is excellent at frugal innovation, that is making things smaller and cheaper. In fact, we might be the best in the world at it.
“I think anyone considering setting up a business in India that relies on innovation needs to understand that people here have different needs than in the US and Europe. That means the innovation that is likely to take place here will be radically different than in the West. But India still needs to improve its innovation standards to meet global requirements.
“In Asia we are going through some of the biggest demographics changes in centuries. China uses 49% of the world’s output of coal for thermal power, and I am worried that India will take the same path. That is why I set up my company.
“Over 50% of India’s population is under 35. The agriculture sector employs 53% of workers here now. The country simply has to develop its manufacturing sector if it wants to survive, let alone grow.”
Jotun has made a name for itself by declaring they are going to have a manufacturing presence in every market where it sells, quite unconventional in this age.
“At least half of our total production is in China now,” said Erik Aaberg, vice-president of Northeast Asia for Jotun Coatings. “Our employees take more responsibility with this business model, and our employee turnover has only been 7-8% in China’s fast-growing economy. We think this is quite good.”
“When we hire new employees, all our training is geared toward showing the Jotun way and expecting that they will be here for the long haul. Marine is still our biggest sector, and we’ve seen our largest growth in the protective coatings segment.
“The most important factor for us is to have a presence in the market. Cost is not a major concern for Jotun. At some point labour costs will go up, but so will purchasing power. We can always automate more things in our factory if needed to become more efficient. But China and India are such huge markets it is a huge benefit to us just to have people there on the ground.”