Top of the Great Era

Chapter 3176 Tariff Adjustment
The cost of self-production is higher than that of external procurement, and the quality is also lower.

According to the principles of market economy, of course it is purchasing.

The most typical example is the automobile industry.

The domestic auto industry has made significant progress in the past 20 years, and one of the major factors is tariff restrictions. Tariff adjustments have made it very expensive for local dealers to purchase foreign cars and sell them locally.

With this restriction, domestic cars become "cheaper".

It will be competitive in the market.

The opposite example is the United States.

The United States was once the world's largest automobile industry country, but it advocated free trade and did not impose high tariffs on foreign cars. As a result, Korean and Japanese cars with low prices, good quality, low fuel consumption, and family comfort flooded into the U.S. market, pushing the U.S. automobile industry to the brink of death.

Zhou Buqi was in Zhou Shaoning's office at this time.

Some of the paintings on the walls and the family photos on the desk have disappeared.

Because Asda is moving.

Try to move to the new office headquarters before going public!
The new headquarters is next to the Ziweixing headquarters park, where 10 office buildings have been built. The overall architectural style is consistent with that of Ziweixing. It also presents the theme of freedom and openness. The two headquarters parks are interconnected, and employees on both sides can travel back and forth without restrictions.

Because there are still many public facilities on the Aisda side that need longer time to be completed, such as indoor gyms, cafes, supermarkets, etc., Aisda employees can also go to Ziweixing. In the future, it may even promote the interconnection of employee canteens, smart shuttle buses, and tourism projects on both sides.

The R&D and design departments have taken the lead and moved to the new home.

Zhou Shaoning's president's office is also taking action, and is expected to move there before the end of the year, and start working in the new home after the new year. The temporary headquarters here is a rented office building, and it will be time to return the lease when the time comes.

Zhou Buqi looked around and continued the previous topic, saying, "Does India have no local protection? No tariff restrictions?"

Zhou Shaoning said: "India is also a WTO country, so it has more restrictions in this regard. However, the 'Make in India' plan was passed last year and has been implemented this year, implementing high tariffs and subsidies for mobile phones."

Zhou Buqi frowned slightly, "Is this the dilemma?"

Zhou Shaoning said: "This is nothing, the tariff on mobile phones is only 20%."

"20% isn't high?" Zhou Buqi thought he was a bit too optimistic. "The profit margin of mobile phones is not even 20%!"

Zhou Shaoning smiled and said, "The 20% tariff is for everyone. The situation in India is different from that in China. India's statistics show that its mobile phone manufacturing self-sufficiency rate is 96%. That may be true, but it mainly targets feature phones. Local manufacturing of feature phones in India should be OK now, especially with the 20% tariff protection, which is definitely lower than purchasing from China and then OEM. But smartphones are definitely not OK."

Zhou Buqi nodded, "The quality is different."

Zhou Shaoning said: "Yes, for example, mobile phone batteries. India can also make mobile phone batteries, but this kind of battery is OK for very cheap feature phones. It is unlikely to be used in smart phones, so the batteries must be imported. The 20% tariff is not only for mobile phones, but also for mobile phone parts."

"That's it!"

Zhou Buqi suddenly realized that there was nothing to worry about.

Just as Zhou Shaoning said, the situation in India is completely different from that in China.

The domestic manufacturing industry is strong enough and is flexible in dealing with many things, judging heroes by results. With tariff protection and certain industrial support, many local companies will emerge, and local products will be very competitive.

Take smartphone batteries, for example.

At the beginning, we also need to go to Korea, Japan, Europe and the United States to purchase.

However, with the tariff adjustment, the procurement cost is too high. In order to reduce costs, domestic batteries will develop under the stimulation of the market. Moreover, with strong enough strength and good enough technology, domestic battery manufacturers have basically slaughtered all European and American battery manufacturers. Not only domestic mobile phones are using domestic batteries, but also foreign brands such as Apple, Samsung, LG, and BlackBerry are also purchasing high-quality and low-cost domestic batteries.

It can be said that in the smartphone industry, except for a few key components such as processor chips and sensor chips, which still need to be purchased from abroad, most of the industrial chain can be self-sufficient in China.

India cannot do that.

It is said that the self-sufficiency rate is 96%, but it is easy to be deceived by the data.

India can also produce its own batteries, screens, memory, speakers, microphones... However, these junk things may be put on feature phones and sold to the lowest class of people, but if they are put on smartphones... Who would buy such a phone?

This means that even mobile phones manufactured in India must purchase a large number of spare parts from abroad, and the cost of these core parts will account for about 95% of the material cost of a mobile phone.

The tariffs on imported spare parts and imported mobile phones are the same, both at 20%.

This means that the tariff for imported mobile phones is 20%; domestically manufactured mobile phones are subject to a tariff of 95% x 20% = 19%.

There is basically no difference!
Even if India has introduced an industrial subsidy policy, subsidizing 5% of the cost of each mobile phone...this is not much difference.

It is not enough to make up for the huge lag in India's industrial chain and manufacturing capabilities.

In this case, why not assemble and manufacture abroad instead of in India? The local facilities are backward, the workers are backward, the transportation is inconvenient, the productivity is low, and there are a lot of problems. If it is assembled and manufactured abroad... it is better to directly purchase the whole machine from China, and then import it to the local market after OEM, which will be more cost-effective, simpler, and have lower management costs.

Zhou Buqi said with a smile: "This is bureaucracy, absurd policies formulated by a group of people who don't understand the industry. No wonder India joined the WTO earlier than China, but did not enjoy the dividends of the WTO like China and become the center of global manufacturing."

Zhou Shaoning nodded. "It's mainly about people. China has encountered some technical bottlenecks. No matter how they exploit employees and force the team, no matter whether it's plagiarism or theft, or even direct robbery, they have to break through the bottleneck and make the product. India is not so good. They lack such ruthlessness and flexibility."

Zhou Buqi said: "Yes, many European and American countries criticize my country's manufacturing industry for exploiting employees, not protecting labor rights enough, not respecting intellectual property rights, and always stealing technical secrets. If you think about it the other way around, you will understand that this is actually a compliment. It is the nuclear weapon that has enabled the rapid rise of China's manufacturing industry to sweep the world. They don't criticize India because India is too bad and does not pose a hidden danger and is not worthy of criticism."

Zhou Shaoning nodded and said, "So India's tariff protection will not pose a threat, but will only further destroy India's local mobile phone manufacturing industry. I estimate that in 3-5 years, the Indian market will be completely dominated by domestic mobile phones. Xiaomi, BBK, Lenovo, Huawei Honor, and TCL are also entering the Indian market to dump those ultra-low-priced low-end phones."

Zhou Buqi narrowed his eyes and said, "So the difficulties that Estar is facing now are not caused by the Indian government."

Zhou Shaoning said in a deep voice: "I think it has something to do with Qualcomm!"