Dell looking outside of China for 'safer environments,' according to Indian PM
By Vlad Savov 
posted March 24th 2010 5:56AM
posted March 24th 2010 5:56AM
Michael Dell's outfit already has one manufacturing plant in India, and the man himself has been on a charm offensive in the country this week meeting and greeting local officials. It could well be, however, that Dell is just seeking to play China and India off one another to get itself the most favorable manufacturing deal, but it's still interesting to find such a high profile protestation against the supposedly enterprise-choking climate and uncertain legal system in China. It appears that Google's wrangle with the Middle Kingdom's leadership has forced consumer electronics execs to reevaluate their strong reliance on China, and the (very) long-term effects could indeed be a shifting, or at least diversification, of manufacturing away from Yao's homeland."This morning I met the chairman of Dell Corporation. He informed me that they are buying equipment and parts worth $25 billion from China. They would like to shift to safer environment with climate conducive to enterprise with security of legal system."
[Thanks, Piyush]
Hell yes. We can't leave all our eggs in one basket.... er country.
@skarletlightning : This is how wars start.
@One Love
No, actually. It isn't.
@glennS Headlines in a few days:
CNN: All Indian ISPs and Gateways, brought down by a mysterious blackout!
ChinaDaily.com : Indian infrastructure unreliable according to Western media. China is the safest place to invest!
@One Love
How can a war start over this? It's an American company, they can move their business where ever they want. There is no law stating that a large company has to have factories in China.
I give props to Dell, they are hitting China where it really matters, their wallets. Fuck the Chinese Government.
@daytripper What do you know about India? Over the last 3 decades, the Chinese government was much better at lifting people out of poverty than the Indian government.
Will Apple leave? I think not...
@Atkins It's Engadget.com. I'm surprised it took us this long to get to Apple...
@AlienSix
No, because Apple and China have aligning views on control and censorship.
@wraith404
I disagree. China is more liberal than CrApple.
@everyone above
I'm laughing so hard that I cried. Don't know when was the last time that happened. Engadget commenters FTW!
Have there been many cases of Western Execs getting into difficulty in China?
@cashclientel Of those that know a bit of China, only very few get into difficulty. There are pitfalls, and probably a bit more than elsewhere, but with some foresight, it is not so hard to make the right decisions. (Myself +10 year exec in China.)
@cashclientel
http://en.wikipedia.org/wiki/Rio_Tinto_espionage_case
@cashclientel Actually China's strange legal system is still preferred by foreign manufacturers, OEMs in economic parks are heavily subsidized, and local governments often willing to do anything to attract investments. Labor, environmental, or financial laws are not strictly enforced in most places, which allow 2nd and 3rd tier suppliers to offer lower price. On the other side, companies will most likely face issues in terms of IP protection and negative public perception back in the home countries, which interestingly I found most hardware companies are willing to trade for lower unit cost.
@hmmwv
They used to do all that, but it seems like they don't anymore. The nationalism vibe is running strong. Chinese aren't hurrying to bend backwards to receive foreign investments and obtain new jobs anymore, because they figured out that when it comes to manufacturing sector, their foreign partners simply don't have a choice anymore. This is what I get from all the coverage from Economist, Time, Newsweek etc.
Interestingly, Engadget has arrows pointing to Kazakhstan and Russia. Do they really think that these are better alternatives?
I think it's a good thing in the long run, especially if it diversifies and makes China realize that they're not the one stop for everyone, it's neighbors could also use some economic push and bringing factories there would really help.
Yup i think that this whole Google thing needs to awake American and European companies. Is it really a good thing that so much manufacturing is outsourced to China?.
Everyday we see knockoff´s of iPhones, Playstations, etc. so clearly the Chines manufacturers coulden´t care less about patents, IP´s etc. which in my book is a huge problem.
I think that Google made the right decision to pull out of China. If China is oh so keen on other countries to respect their laws, maybe they should take a long hard look at them selves, and see how they treat their own citizens, not to mention their total destruction of the poor people of Tibet etc.
Good on you Google.
@bingster
My thoughts exactly. This whole outsource manufacturing to China is gettin a bit out of hand. Im sure there are other deserving nations who should be given a chance as well.
Also, given their gross human rights violations, brainwashing of citizens by blocking information and ongoing gradual cultural genocide (both Tibetans and Uighurs), China should actually be boycotted.
@bingster
This is just about Dell looking to get a cheaper deal. Look what they did in Ireland.
@bingster
I totally agree that there is WAY the hell too much outsourcing.
...But replacing a Trade Deficit with China, with a Trade Deficit with India doesn't help the US and it's people.... that's still money flowing in the wrong direction.
We either bring some of that manufacturing back home, or continue to suffer the consequences of a reduced standard of living and high unemployment. Your $200 Chinese-made widget might (OH NOES!1!) have to give way to a $250 US-made version.
The problem is that no company is going to do that on it's own without prodding. Be it through tariffs or other incentives products needs to be made in the US, or continue to ship $250,000,000,000 each year to foreign countries.
I don't know about you guys, but both local towns and neighboring states are hurting for money - I am sure that if there was an extra quarter of a TRILLION DOLLARS injected into our home economies each year we would be in a lot better shape financially.
@Atkins What I mean by 'Given a Chance' is that there are loads of other countries which have the same potential to manufacture like China. In fact, these could even be cheaper than China without all the censorship. Im not just talkin about Asian countries.
All I hope is that it gets diversified so that one country does not get too big for its own shows and ends up dictating terms to the very manufacturers who helped get its economy on track. So, personally, I feel that this step by Dell and Google is right on the money.
@DarkGrimoire
eep.. I meant own shoes.. damn typo..
@Hazdaz
Blame Harvard and their BS 40,000/yr.
If it weren't for the crappy Education system in the US, everyone on this board would have a college degree from a great school, and you wouldn't be bitching about China taking all the $2/day jobs.
@Atkins
"And how is 'bringing manufacturing home' going to improve your standards? Your $200 chinese-made gadget would probably cost $1000 if made in the US. Good luck buying a computer then."
You are seriously questioning how bringing HOME jobs is going to benefit the US. Really? You don't see that unemployment is about 10% and over 20% of the people here are UNDERemployed.
There is NO bigger creator of well-paying jobs than manufacturing. No other type of industry or type of work creates more jobs both directly and indirectly. And yet as a nation we have let those manufacturing jobs - and not so coincidentally our standard of living - get shipped away over the past 2+ decades.
And your claim that a $200 Chinese made good would need to cost $1000 if made here is utter nonsense. There are still a few remaining companies building products here and none of them have even close to the 5-to-1 cost ratio that you claim. A well designed, high-efficiency factory in the US can compete with anyone in the world... within reason. BusinessWeek semi-recently had an article about this, and the cost difference when factoring shipping, longer leadtimes and other issues with outsourcing was I believe less than 20%.
@bingster From the quote it sounds like Dell is already in advanced talks for that $25B order, but are open to other options to future purchases. Frankly speaking, I don't think anything gonna change at Dell, just sending a message to China to say hey if you don't give us another tax break we'll go to India.
I consider Western hardware companies won the battle over that dumb green dam crap, so they actually face an okay business environment than service providers like Google. So far China still provides the best compromise in product price, quality, and availability for hardware manufacturers, and the advantage is only getting bigger. The only good news coming from this story is better price for a Dell computer in the future.
@Atkins
You just pointed out one of the biggest problems with outsourcing... you don't JUST lose the widget-maker... you lose his suppliers, and their suppliers and all the way down the food chain. It's not just 1000 jobs at XYZ company that get shipped overseas, but also the 500 jobs at the rubber-maker and the 200 jobs at the plastics company and 300 jobs at the electronics assembler that all supply XYZ components.
No one is implying that we stop outsourcing altogether - it's clearly not possible, nor is it even optimal. Trade in general is a very good thing. The difference is we need FAIR trade with countries like China.
That 30-50% quote you posted is usually not taking into account all the other factors involved in making an item. You can MAKE an item much cheaper in China, but you are completely forgetting that the manufacturing costs are not the only costs involved in producing a good. You are absolutely going to incur fairly large shipping costs to simply get your product to the US. If the product was designed, engineered and built there, then you are almost toast, but if it was designed here, there are tons of overhead in communicating, revising and re-revising changes and stuff back and forth. All that eats into the false notion that China is 100000x cheaper than making the same item in the US. Also note that that article was written 6 years ago - the costs to do business in China has risen as their standard of living has risen, while the costs in the US have for the most part fallen some.
@Bingster and DarkGrimoire
"they should take a long hard look at them selves..."
"given their gross human rights violations, brainwashing of citizens..."
See Mexico, Nicaragua, Cuba, Panama, Honduras, Hawaii, Vietnam, Iraq, Afghanistan (in the 80s), Iran, Papa and Baby Doc of Haiti, etc.
It's easy to call the kettle black when you're an American (yes, I'm an American). If W. taught us anything, it's that judging a sovereign nation based on the fact that they don't adhere to your own personal world view is a dangerous game to play.
Ummmm, what is wrong with America? Why not just hire people here at minimum wage and produce some jobs here. These companies crack me up. They are always crying that they are not selling as much so to further crap the issue they take the jobs away and put them in other countries. If it were not for the United States Business's would Dell be where they are today? BASTARDS!
@Appleblows
Patriotism is overrated.
@Luzzio Unfortunately, we actually have morals. So we could never underpay or abuse workers in the US like we do in China or India. And, we aren't going to start abusing workers because the second that happens the educated class is going straight to Canada or Europe.
@FauxNews Morals? I think they're called laws.
@FauxNews and we won't pay for gadgets either. If a US gadget cost $400 and a chinese one cost $150. To run away with the chinese one :)
@Appleblows
I bet the unions would be really happy to work at minimum wage.
See where I'm getting? Cost of living is higher here, and so is the currency. Companies would need to pay more to their employees. Unions take care of that. This increases the product price which then the customer refuses to buy because its more expensive.
We have unemployment because we wont settle for less than what we are used to.
@Atkins
And no one will buy computers that would be built in the US.
Why are you so opposed to going to College?
Stop trying to compete with the 3rd world for these crappy jobs.
@Appleblows
The Un-Holy-trinity of over-taxation, over-regulation, and over-aggressive unionization are responsible for driving business overseas and keeping it there. I'm not going to say that eliminating (all) federal taxes on investment, research, production, advertising, shipping, storage, etc. etc., and going with say, a consumption tax will fix the issues.
But, at this stage, there is no harm in trying.
@wilfulmac Actually I think vapore0n hit the nail on the head as to the reasons.
If there was no taxes on imports more manufacturing jobs would go overseas; if a company can exploit a poor county to save a buck they will. Regulations, are why working condition in US plants aren't oppressive as Chinese plants; if you've ever lorded US superiority over Chinese oppressions look as the laws that force companies into humane practices. Take away the union and the manufacturing jobs become minimum wage jobs, many people won't work those and those that are willing are usually accused of coming from Mexico and "Stealing" our jobs.
India is currently dealing with a lot of foreign companies setting up manufacturing plants. The problem is these plants don't get the same level of quality as China or Taiwan.
Being an Indian myself, I try to avoid any Made in India electronics manufactured by foreign companies. For eg: The phones with the Made by Nokia (Indian plants) have the most complaints as opposed to a Finland manufactured device.
Just my 2 paise.
@Ameen
Blame that on manufacturers as well as they want to cut on expenses using cheaper materials. Fabrication process should be same everywhere.
@GnuGeek
Agree, but most companies currently in India want to cut cost further, apart from Government subsidies and what-not, they treat India as a mediocre quality manufacturing hub, with liberal rules ( untreated effluents let off into the previously clean rivers, etc.)
Also, the products manufactured in India are mostly sold in India and African countries where the emphasis is not on Quality but on Quantity ! This low mediocre manufacturing trend among foreign companies in India has to come to an end.
@GnuGeek
Blame it on consumer who choose the price
YAY! My two favorite tech companies are getting out of China!
@gerrrg
Blasphemy! Apple is not one of your favorite tech companies?
@gerrrg Google I can somewhat understand... But Dell? What?
@scots79
Dell's technical support rocks...at least on the small biz side. Phone, chat or emails even on the weekends; it's all the same, and they're not outsourced.
You cannot find a better deal for a core i7 laptop, refurbished, for under $850, than at Dell's outlet. Most everyone should know by now, Dell's outlet store is the best in discounted prices.
When you open up a Dell desktop/tower, it's all cleanly arranged and adding or replacing stuff is a breeze.
@SuperGadget
Haha! I don't own a single Apple product. I'm Google all the way, including my G1.
@gerrrg
Yay indeed. Fuck China. And I say that not as a closed-minded hick, but as a guy who spent over six months in our communist counterpart.
@gerrrg That's right I have bought Dell products from the "home" side, the educational side and the small business side. The service is night day between the education/small business side and the "home" side. When I tried to get service from the small business from the business CS number for my home computer they stopped me right after the service tag was heard. I don't blame them, there is a different price and a different service level. You get what you pay for. They can't offer top notch service when they sell stuff at the lowest possible price. The American consumer loves to pay the absolute least possible without regard for quality and its what they get.
@gerrrg And Dell is getting further into a country with just as many human rights abuses and corruption. Or do you think that the Indian Dell workers are getting paid $20 an hour? lol
I do believe there is a bigger picture to Google's servers being hacked from China and subsequently its pulling out of Chinese market.
Atleast laws in India are not strict and there is no stupid censorship in India I believe.
If China's hardass stance continues, soon it would be finding itself in trouble.