Thums Up and Misplaced Patriotism

It must have been some time in the 1990s in India when the government allowed Coca Cola back into India. In my patriotic zeal propelled by teenage absolutism, I decided I would only drink the Indian brand "Thums Up," a cola that had a similar color and flavor as Coke. Thums Up was made by a company called Parle Products and it was bottled at a factory not far from our flat. Within days, I read the announcement that the owner of Parle Products had sold his company to Coca Cola. He had looked out for his own financial interest, and made me realize how naive I was to not think of mine. 

I thought of this story because of the convergence of a few events:

1. The CHIPS for America Act
2. India awarding contracts for trains to European Alstom
3. Honor's withdrawal from India

The CHIPS act has laudable goals to ensure that the US does not lose competitiveness in semiconductors. As long as the equipment to make semiconductors, the tools to design them, and the latest designs to use that equipment all originate from the US, then does it really matter where the actual chip gets manufactured in volume? The geographical closeness of Taiwan and South Korea to China and China's growing aggression in the Taiwan Strait seem to be the key reasons why this act was needed to secure continued supply of semiconductors. One can fully expect a future where the most advanced chips will be made in China, with our without American help. At that point, we'd just be artificially limiting our own access to lifestyle improvements made with Chinese technology.

Now let's take the case of the gradual build out of slow "metro railways" in India and the uncertainty of the rollout of the first "bullet train." By picking Alstom and Japan based companies, the Government of India is very likely penalizing the Indian populace by paying more for technology that's been most widely deployed in China. I had made a similar argument when India was picking mobile network technologies. National security concerns can be allayed technologically.

Finally, and Indian customer feeling patriotic and buying a more expensive local brand over a cheaper Chinese brand is doing disservice to himself, just like I was, when I stuck with Thums Up. Let's say a local manufacturer, takes a local loan and builds an inferior phone. Is that the best utilization of capital? Even with the self-evident assumption that all people are equally capable, the phone will likely be inferior because the local manufacturer does not have the same sales volume, supplier discounts, research and development as would a higher volume Chinese manufacturer.

References

1. Titles - H.R.7178 - 116th Congress (2019-2020): CHIPS for America Act | Congress.gov | Library of Congress
2. https://www.railadvent.co.uk/2022/07/alstom-wins-order-to-supply-52-metro-trains-to-india.html
3. Former Huawei smartphone sub-brand Honor said to withdraw team from India amid geopolitical tensions | South China Morning Post (scmp.com)