Reported plans by Taiwan-based manufacturer Foxconn Technology Group to expand in India seem implausible, a person close to the matter told the Global Times Thursday.
"Given that the Indian market is quite complicated, many factors must be taken into consideration if Foxconn plans to expand there," said the person, who declined to be identified.
Foxconn still relies heavily on the Chinese mainland, he noted.
The comment came in response to media reports that Foxconn, the major assembler for Apple Inc's iPhone in the Chinese market, is planning to open up to 12 new factories by 2020 in India and is in talks to produce the iPhone in one of the world's biggest markets for handsets to seek lower costs.
Recently, Pegatron Group, another major Apple contractor from Taiwan, has reportedly encroached into Foxconn's territory in part because of lower costs.
A report issued by New York-based nongovernment organization China Labor Watch in February showed that Pegatron's plant in Shanghai possessed an 8 percent cost advantage over Foxconn's factory in Longhua, South China's Guangdong Province, in 2014, translating into a $61 million advantage per year at just one of many Pegatron factories that serve Apple.
Foxconn has also decided to establish a fund to invest in Indian technology start-ups, according to a report by the Financial Times on July 13.
"Venturing into the Indian market is often a top consideration for many enterprises as they expand overseas. However, enterprises that seek to develop their operations in India will encounter difficulties due to different laws in different local regions," the person said.
Another difficulty is the large number of languages used in India, he noted.
Nonetheless, Chinese telecoms giant Huawei Technologies Co sees great potential in India.
It has won security clearance to produce telecoms equipment in India, aiming to supply locally manufactured consumer products, Reuters reported on July 16.