by Leo Li
In the past few decades, China has grown to become a major economic power. Much has changed for the country since the government decided to allow international trade and embrace the global market. China’s economic wheel began to turn very fast. These days, China is a giant, not only in terms of manufacturing but also in purchasing power. It is not surprising, then, that even the biggest brands in the world have for a long time now been shifting manufacturing to Chinese factories. They get the benefits of low production costs and, in many cases. direct market access to Asian consumers.
Here’s a detailed explanation of the biggest advantages of finding manufacturers in China.
Pro: Lower production costs
One of the most well-known advantages of manufacturing in China is that it’s cheaper than making goods in many other countries. Lower Chinese manufacturing costs translate into better margins and lower prices for the end user. Your brand’s gross profit can increase with the lower cost of production. Even factoring in shipping costs, it’s still usually cheaper to manufacture in China.
Pro: Faster production and scalability
Improving your speed to market can help your company maintain a competitive advantage. There’s no other place on earth with so many factories and workers ready to prototype and produce new products at the drop of a hat.
Pro: Easier international expansion
The Asian market is growing rapidly. If you want to expand and offer products to buyers in Asian markets, what better way than doing business in China by starting your manufacturing operations there? When done correctly, Chinese market expansion can multiply opportunities for companies. The logistics of introducing products into China and other Asian nations are also streamlined when you use Chinese factories.
Pro: Service for smaller brands
Many Chinese manufacturers are often very willing to work with small and unknown companies, as long as minimum order quantities are met. You don’t have to have a big famous brand to get good service from a Chinese manufacturer.
However, there are some disadvantages to consider when choosing Chinese manufacturers.
Con: Communication difficulties
On a basic level, difficulties can come from the language barrier. Chinese is a hard language to learn for many Westerners, and it’s not a language you can just pick up from airport pamphlets. Manufacturing partners usually have some level of English, but it’s not good to rely on that for agreeing on complex manufacturing contracts. Using a 3rd party product manufacturing agent who understands both languages and cultures can be indispensable.
Con: Complex logistics
Products may take a long time to get to the end user—up to 30 days by sea. You may want to have a distribution hub on home soil, but that adds to your cost. Also, if you sell out of a certain item, your next shipment may be 30 days out. That can be disappointing for customers. You can always ship items by air from China, but you’ll have to figure out the cost of that as well.
Con: Quality control issues
The “Made in China” label has had negative connotations in the past. Many people are familiar with inferior counterfeits that represent a shell of the original product and fall apart upon use. However, you can find high-quality manufacturers in China today. The key is to enforce quality standards at each point in the manufacturing process and not to assume that the first product run will be exactly like the prototype. Also, some product categories may be more prone to quality issues than others. It’s a good idea to work with an agent in China who will monitor quality control.
Conclusion
Deciding whether or not to move manufacturing to China takes careful consideration. Manufacturing needs are different for every company, and it always pays to hire a product development and manufacturing agent who has experience and can help you avoid pitfalls and horror stories.