They already have the second one.

Unfortunately that's only because they are cheap

Thats exactly what people said of China 15 years ago. Just a bunch of factories good for cheap knockoffs, not a place for high quality stuff. Now they have Tencent, Baidu, Huawei etc and a #2 spot in the global economy.

As someone put it: manufacturing is a ladder.

They also said the same of South Korea (LG, Samsung) and before that, Japan (Sharp, Sony) and Taiwan.

Can you explain further? What does it mean for it to be a ladder?

This is all my own interpretation, but it’s a bootstrapping problem. Feynman complained about a consulting gig he took to try to bootstrap STEM programs in South America. You need mentors to make more mentors. If you can’t send people off to train or coax people in, you’re left with whoever can intuit things on their own and explain them to others. That pair of skills is exceptionally rare.

If you are the first factory in an area, nobody knows what to do. So you make simple stuff with high tolerances as you build a base of skilled labor. and a customer base.

Then you ratchet up, and ratchet up, and get nicer customers and more cash and contacts and make products that require more and more sophisticated processes.

If you’re lucky, you make middle to high end stuff that few other people can before the exchange rate completely fucks you vs the next up and comer.

India is predicted to be #3 by 2050, almost equaling the US:

https://www.theatlantic.com/business/archive/2012/02/the-wor...

It can be a large economy, in part because there are 1.3bn inhabitants, but my point is that people consume services provided by Indian companies largely because they are cheap.

This does not seem true. Indian service sector is very good at its job barring a few bad apples. For example, FinTech industry has done a remarkable job of easing payments. Compare that to Germany where the service sector is just awful. Of course, German competency in manufacturing is far ahead of India right now. It would be great to see both countries fixing up their weak areas in the future.

That may be true but Indian fintech is for domestic use and we are talking about exported services.