China is responsible for 28.4% of global manufacturing output. Since opening to the world, government policies have adapted to make foreign trade and business with the country easy. But, do you know how you can benefit from manufacturing there?
If not, then we can help. Read on as we discuss why you should outsource manufacturing to China.
The Benefits When You Outsource Manufacturing
There is a reason so many companies have turned to China manufacturing for their business needs. The most beneficial reasons have been collected below.
Low Labor Costs
Labor costs in China are much lower than in other parts of the world. As you move to manufacture outside of the main hubs like Beijing the average wage drops even further. All this allows you access to low-cost workers, invaluable if you are operating a labor-intensive process.
This can also be beneficial if you have a company with a high turnover rate. You don’t need to keep recruiting and training as this becomes the job of the company you have outsourced to. When someone leaves the factory process, it has no impact on your company.
Ability to Scale-up or Down
When you outsource any process, it can make it easier to scale up or down. If you need more of the service, the company you outsource to can hire more staff. If you need less then you can cut back without having to reallocate or lay off your workforce.
This works in accounting and bookkeeping. It is the same when you outsource manufacturing to China. Many companies have contracts with other factories so they can arrange new products should you need them. If you need less for the next order, they can scale back.
Lower Cost Products
There are two main reasons that China manufacturing outsourcing can keep the costs of your products low. As it already has a huge manufacturing industry within the country, many products do not need importing. As a result, they don’t suffer from import taxes.
Within China itself, a system is in place that facilitates supply chain production. Components and assembly are easy and quick to access. All this translates to a lower production cost which transfers to you and your customers.
Access to a Skilled Workforce
Just because labor costs are lower, it does not mean you are hiring an unskilled workforce. China has a high number of graduates that work within the country.
They also have programs to attract talent to the country from other global platforms. You can have the best from across the world working on your projects.
Positive Business Policies
Part of China’s growth can be attributed to its policies that invite and facilitate business in the country. It is consistently improving its internal infrastructure to make transactions and production easier. With its consistent changing of the law to assist, it is simple to do business in the country.
Digital infrastructure has also improved with it. By inviting new technology and innovation, China has become a great place for startups and technology companies.
Considerations to Make
While most companies can benefit when they outsource manufacturing to China, there are some considerations to make. These can help you set up and organize other processes to run smoothly.
Understand Cultural Differences
Though many business objectives are the same and both parties want a mutually beneficial outcome, there are some differences. The language barrier is just one of many. Even phrases and points may not translate effectively.
Many Chinese business transactions concentrate on the building of a relationship. Getting to know one another and building trust is important. This can be different from the culture of economics prevalent in western culture.
One way around this is to deal with a company that is already well versed in Chinese and western business relations. China2West has been doing this since 2005 and has all the expertise you need.
Investing Time
The cultural differences above mean that the best thing you can give when outsourcing manufacturing is time. Invest in the relationship with the organizations you are using. This ensures you get the most attention when it comes to performance, quality control, and pricing.
If this is too much for one person to handle, then designate fostering relationships with various people in your organization. Assign one person to liaise on logistics, one for products, and one for quality control.
Work on Quality Control
When working directly with Chinese factories, you may find quality control lower than products produced in western countries. This is because many of the rules and regulations regarding product safety are not in place. This can be overcome easily by using a quality local agent such as our company.
Different Intellectual Property Laws
Laws regarding intellectual property rights can be different in China. If you do not put the right safeguarding in place, you may find a manufacturer making and selling your products at lower prices and lower quality. Without the legal framework, there may be very little you can do.
One way to get around this is to make sure you understand Chinese IP law. Working with an experienced company can help ensure there is no confusion about this. Our factory is an IP protective assembly factory meaning all of your intellectual property stays your own.
Starting the Process
Now you know the benefits when you outsource manufacturing, decide if it is for you. Speak with others in your business and see how it could work. You should then look for a trusted company working within China to facilitate the process.
China2West should be your first stop. We have our own assembly factory, providing peace of mind for your manufacturing process. Click here to see all our services and begin reducing your production costs today.
