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Can India Replace China as a Manufacturing Hub?

Indian laborers work at a nail production unit in Tripura, India, on June 4, 2013
Indian laborers work at a nail production unit in Tripura, India, on June 4, 2013Photograph by Abhisek Saha/AP Photo

In a season of odd news from China—remember the floating pigs?—this was just another bizarre story: A U.S. businessman was held captive by his Chinese workers after they discovered his plan to shift production to India. Charles Starnes, chief executive officer of Coral Springs (Fla.)-based Specialty Medical Supplies, is a free man again, leaving the grounds of his company’s site on the outskirts of Beijing late last month.

One reason this story is so strange is where Starnes wanted to go instead of China. Why would Specialty Medical or any other Western company want to move away from China, the world’s manufacturing hub, to India of all places? Chinese wages are going up, and the labor market is getting tighter, making it more difficult for companies that require a large supply of inexpensive workers to continue operating factories in China. That’s why some businesses are looking at alternatives in the region, such as Vietnam and Indonesia.