​Foxconn, the world’s largest electronics maker, has expanded significantly in India over the past decade with the idea of ​​creating a viable alternative to China there, but all manufacturing in China remains basic for a number of reasons, writes the Financial Times.

Foxconn, an industrial giant with a million employees, annually assembles more than 200 million iPhones and other electronics models for a variety of brands.

Apple and other tech companies have been trying to open factories outside China for the past three years to reduce dependence on the world’s largest country, which has been troubled by Covid-19 and rising tensions with the United States.

Several large companies have a strategy called “China plus one”, the idea is to have a strong back-up base in case there are problems in China and production there falls. Two countries are really viable: Vietnam and China.

Foxconn has invested heavily in India over the past 15 years and has 50,000 employees there, but in 2022 it will generate just 4.6% of its $216 billion in annual revenue. In 2021, the share was 2% and Foxconn announced new investments in India.

Three years ago, Foxconn had 70% of its global operations in China, and today that share has risen to 75%. Why didn’t India grow more? There would be several reasons, but the most important one is that subsidies are not at such a high level to attract Foxconn with mega-investments.

In addition, there is the question of profitability: even if manufacturing is done in India, a large number of component suppliers are located in China and are unlikely to be sourced from India. Some calculations have shown that manufacturing in India is not cheaper than in China, especially if a large part of the components must be shipped thousands of kilometers away.

Foxconn has nine campuses in India with a total of 36,000 factories, the largest in two regions: Tamil Nadu and Andhra Pradesh, which manufacture smartphones and accessories. However, most phones made in India are sold there or in neighboring countries.

The cost issue is also related to the fact that in neither India nor Vietnam Foxconn can open giant campuses with more than 100,000 people, as it did in China. In India, workers do not want to spend days away from their families and live on the campus where they work, as in China.

In general, expansion in India has many limitations for Foxconn on the cost side, especially since the benefits are not that great, although Indian officials are promoting an investment program called “Make in India” that promises significant subsidies for those who want to create jobs in the field of electronics.