Recently, India seems to have become a hot commodity in the international market. Many companies have built new factories in India, and in doing so, they have made great progress.
For example, Musk, who is very famous now, plans to build a large-scale Tesla factory in India, similar to the Tesla factory in Shanghai. He wants to invest 14.5 billion in India, but I don’t know if Musk can be as successful as before this time.
1-The notorious Indian market
Before talking about Musk, we have to start with India.
First of all, if possible, no company would be willing to leave its hometown and go to another country to invest and open a factory. This would increase communication costs and would also be bad for its social responsibility.
It has to be admitted that for many developed countries, building factories at home is really expensive. Not only is the land price not cheap, but even the labor cost is frighteningly expensive.
There is no other way. In order to save money, many companies choose to build factories and invest abroad. This has also brought good opportunities to many poor and backward countries.
In the last century, we relied on this to develop. But as our economy gets better and better, the price of labor and land has also risen very fast. Therefore, many multinational companies have begun to look for new locations.
At this time, India began to attract everyone’s attention because of its geographical proximity, abundant labor force and cheap labor costs. Soon, investing in India became very popular, and many multinational companies wanted to expand their business in this land.
It’s a pity that many companies had to fail in the end. Although the losses were not too big for them, the examples of so many predecessors’ failures also discouraged later investors. Gradually, Vietnam, which is next door, began to be favored by multinational companies, which is why some things are now made in Vietnam.
Why does the money invested in India always go down the drain?
We have to know that these big companies usually invest in India after tasting the sweetness in other countries, especially China. For them, from building a factory to managing employees, this set of processes is familiar, so the company itself must be reliable.
Why does this work in China but not in India?
This has a lot to do with the huge gap between the rich and the poor in India. In fact, even though India is now the fifth largest economy in the world, its economic achievements cannot cover up the various internal injustices, such as the caste system and language hierarchy.
In India, being able to speak English often means being born into a noble family and being a symbol of a high caste. People of lower status do not even know the official language of India and can only speak local dialects.
You have to know that Indian dialects are really not like our Chinese dialects, at least the dialects in different places are considered the same language. Often, the languages spoken in two villages are so different that they are like the languages of two countries, with different writing and different ways of speaking!
After all, there is no figure as powerful as Qin Shi Huang in Indian history who could accomplish such a great feat as unifying writing and vehicle specifications. It would take thousands of years for such a feat to be recognized.
In general, to open a factory in India, it costs a lot of money just to deal with people, not to mention the overall ability and quality of those employees.
Although China was not rich in the past, most people were hardworking and willing to work hard.
But some of the lower-class people in India, perhaps because they have been poor for too long, have lost the drive to strive. Sometimes when they join foreign companies, they don’t think about doing a good job, but instead think about how to cheat and play tricks.
Many big companies can’t continue to operate in India because of this: after working hard for most of the day, the products are gone and the Indian employees take them home. Who would dare to invest in such an India? Of course, this kind of thing happened in China before, but it was just the behavior of a few individuals. But in India, it has almost become a common phenomenon.
In addition, the traffic conditions in India are really bad. In many places, the roads are not even roads, as they are occupied by street vendors and electric vehicles. Cars can only squeeze through the crowds.
After a big loss, India has become a “forbidden place for foreign investment” in the eyes of the outside world. Anyone who dares to invest here will definitely lose all their money.
But even if there are so many problems, why is Musk still determined to build a factory in India? Isn’t he afraid that many people have failed here before?
Tesla in trouble
Tesla is having a hard time right now. From the latest financial report, we can see that they originally planned to deliver more than 440,000 vehicles, but ended up producing only more than 380,000. It is obvious that there is a big problem with their internal production capacity.
You have to understand that this data does not mean that Tesla’s sales are so hot that Musk can’t keep up with production. It means that he promised to deliver the cars to others, but in the end he was unable to deliver!
Many times, companies will first roughly calculate how many cars they can produce. For example, if they say they can produce more than 400,000 cars at the beginning, everyone can accept it if they end up with 10,000 or 20,000 fewer cars. But the result is almost one-fifth less, which is obvious. Some of Tesla’s factories must have encountered major problems.
Moreover, this kind of dishonesty is fatal to every enterprise. It will not only damage the reputation of the enterprise, but also seriously affect consumers’ satisfaction with the product.
It’s like you told someone that you can go to the store to pick up your new car in a month, but on that day, the clerk told you coldly that your car has not even been built yet. Do you think the consumer would be furious?
Therefore, Musk has been very busy and anxious recently. In order to get rid of this problem, he tried all kinds of tricks on the old Tesla factory, but in the end he didn’t come up with any good solution.
Some people may think, if there is not enough time to produce, can’t we just let the workers work overtime to get it done quickly?
The problems Tesla is facing are actually quite thorny, and they cannot be solved by simply asking workers to work overtime. There seems to be no other choice but to build a new factory.
More importantly, our domestically produced cars have also caught up, and the domestic market has begun to compete on price. Among the many car companies that have cut prices, Tesla’s previous price advantage is not so obvious.
Musk turned his attention to India because of the problems he encountered in his own production and the fact that there were competitors outside who were chasing him.
Future possibilities of Tesla
Maybe it was because Musk had many successful experiences in the past, which made him feel particularly confident. Even though many predecessors had hit a wall in India, he still felt that he could succeed.
Since last year, Indian Prime Minister Modi has talked with Musk many times. The two have been thinking about whether Tesla and India can do something together. Modi also made a particularly attractive proposal, saying that India is willing to help Tesla and reduce its import taxes.
Did you know that India is the most populous country in the world? Its market is so huge that it makes people excited. But strangely, many imported cars cannot be sold in India. The problem lies in the high tariffs in India.
According to the rules of the Indian government, if the price of an imported car exceeds 40,000 US dollars, India will impose a 100% tariff on it!
Just like buying an ordinary Mercedes-Benz A-class car in India, the price may be twice that of domestic prices. If compared with local prices in India, it will be even more expensive.
Therefore, many car manufacturers cannot enter India because of high tariffs, but now it seems that India wants to develop quickly. Take Musk’s Tesla for example, Prime Minister Modi is willing to charge them only 15% tariff.
From 100% to only 15%, the gap is really huge. It is precisely because of such a huge discount, unprecedented, that Musk decided to invest in India.
On the one hand, India has a lot of labor and cheap land. Tesla may use these advantages to build the world’s largest factory, which will solve production problems at once and smoothly enter the huge Indian automobile market.
India’s domestic automobile manufacturing industry has never been well developed. Now, Tesla, the world’s most successful commercial automobile manufacturer, has entered the market. For local car companies, this is a serious blow from a powerful competitor.
Despite these benefits, we cannot ignore the various problems faced in building factories in India.
Road conditions, worker competence, and whether India will deliver on its promises are all things we have discussed before. In addition, whether Tesla can be liked by the Indian people is still unknown.
First of all, most people in India are not rich enough to easily buy a Tesla that costs more than 200,000 yuan. Coupled with the impact of tariffs, Tesla may be more expensive to sell in India. You know, in China, the second largest country in the world, many families’ cars are cheaper than Tesla.
It can be said that the Indian auto market is really huge, but can Tesla really eat up all of this big cake? Maybe Tesla will end up hitting a wall like SAIC. You know, before Musk took action, SAIC had already stumbled in India.
Everything went smoothly at the beginning, but when it came to profit sharing, India did not give 5.1 billion US dollars as agreed, but only 1.5 billion US dollars!
Conclusion
It is rare in the world for a country to go back on its word. With the SAIC incident, how can we be sure that Modi will really keep his promise this time? Maybe Tesla’s factory has been built, and India suddenly says that the previously agreed tariffs are not valid. This is not the first time that Indians have used such a method of going back on their words.
To put it bluntly, whether Musk can go smoothly on that road in India and what will happen in the end will have to be tested by time.