Chinese manufacturing is a practice that U.S. and international businesses have recognized as an essential asset to reducing prices for their products. It’s utilized by some of the most prominent brands and it has become a staple to successful manufacturing. As domestic prices rise, the need for affordable overseas manufacturing grows.
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China has answered that call and today, you see the “Made in China” tagline on many custom products including clothing, furniture, and toys. Their manufacturing capabilities have continued to grow since the inception of China manufacturing, and their factories produce private label products worldwide. In 2002, China had over 80 million total employees in the manufacturing sector. By 2009, that number had grown to approximately 100 million. The United States, the next closest, maintained a steady decline in manufacturing employees through this period, with 15 million manufacturing employees by the end of 2009.
China has the lowest labor costs in the entire world for manufacturing employees. At the same time, it has grown an economy responsible for bringing more people out of poverty than any other country. Lower costs of living make China’s low wages manageable for the common manufacturing worker, and their factories are thriving by producing goods for the entire world. Sourcify and other companies help transition businesses to the profitable and successful move of manufacturing in China.
Lower manufacturing costs
The cost differential between manufacturing domestically and manufacturing in China is significant. Domestic manufacturers have higher overhead with steep training costs and high turnover. China’s affordability makes overseas manufacturing ideal for the common business.
Cheaper labor
Outsourcing to China gives you access to that factory’s cheap labor without having to train the employees, provide access to a computer, or endure any of the other hardships of hiring locally. Wages are significantly lower in China and tapping into those savings is as easy as establishing a relationship with a factory.
Higher production capability
China-based factories produce goods for the global economy. They have scaled their manufacturing capabilities well beyond what was ever believed possible. When you outsource to China, you’re working with time-tested factories that have been producing quality products in similar industries as yours for years on end, and in massive supply.
Better expansion and diversification opportunities
Have you wanted to expand your business and offer new product lines or tap into upcoming markets, but didn’t see that being possible through existing wholesalers? Outsourcing to China manufacturers allows you to do this on-the-fly. You can expand and diversify your product offerings, as well as sell your products to international markets much easier.
You can still cut lead times
When you manufacture domestically, you become accustom to an immediate lead time. You’re manufacturing on-site, so there’s no real delay from when you place an order to when you receive it. This results in considerable savings because you can manufacture only the amount of stock that is needed, without over-manufacturing and eating into the budget.
This is often seen as a drawback of outsourcing the manufacturing process to an overseas provider. Your lead times are significantly increased, which means you might have to order more than is needed to account for the delay. However, with China manufacturers there are actually ways to cut lead times and experience quick deliveries of your product, which allows you to carry less stock and spend less.
Some of the ways you can do this include:
- Order more often… By increasing the frequency in which you place orders, you will have a continuous supply of incoming product. Many factories have minimum order quantities, but they’re often set at reasonable amounts or are negotiable by arranging for more frequent orders. By placing orders more often, you won’t feel the pressures of low inventory and have a dire need to manufacture more product. This might be a more expensive approach since you won’t get reduced bulk shipping, it will save your business money in carrying costs. Keeping too much supply on hand is a costly mistake that can be a damaging move to a startup.
- Send automated information… When you place an order for product with your supplier, are there manual processes that must take place for the order to be approved? If you can, work on automating the delivery of that information. Whether it’s a purchase order, invoice, or inventory sheet, start using software to automate the process. Inventory management software allows for auto purchase order generation and reorders once inventory levels reach a certain criterion.
- Share your data… By providing your supplier with forecasts on inventory levels, you can allow them to track the same data and automate a purchase order on your behalf when needed. There are many suppliers that will happily integrate with your inventory management software and take the burden of monitoring SKUs and their inventory levels off your shoulders. Rather than having to expedite shipping for an order because inventory is low, the factory will already have kept tabs on the situation and done this for you.
Production efficiency
Domestic manufacturing can be extremely expensive. Between labor and training costs, complications in the manufacturing process, and equipment costs, U.S. and other mainland manufacturing companies must have considerable profit margins to manufacture at home successfully. These are industries such as aerospace, where profit is considerably high and sometimes even government-backed. Startups and businesses that are new to the industry have little chance of competing. China eliminates the high rate of failure that is so common in domestic manufacturing. Production efficiency is extremely high and because labor costs are affordable in China, complications like defects rarely derail the operation. Things can continue running smoothly and at little expense to your business.
Scam prevention
One of the biggest concerns with manufacturing in China is the potential for being scammed. When you aren’t working face-to-face, when there are language barriers, when the location of the factory is across an ocean, there’s a tendency to grow worried. Companies like Sourcify actively work to protect businesses by connecting them with trusted and vetted overseas factories. You can immediately build a relationship and start outsourcing your manufacturing to China, without having to worry about being scammed or taken advantage of. Their system is a fool-proof way to get started that essentially guarantees you success in choosing a factory.
Product duplication capabilities
Is there a competing product that hit the nail on the head? You love what they did, you think it’s fantastic, and you’d like to produce something similar for your own business. You don’t want any legal trouble though, so you know it must be a duplicate and not an exact copy. China’s product duplication capabilities are superior, and they can copy products at faster speed and with better accuracy than almost anywhere else. This is the exact process that made China the manufacturing kingpin to begin with. They used American and Japanese made products as inspiration and produce replicas that are essentially the same thing, but from materials that cost less and with a cheaper labor force. If you already have a working concept of a product you would like to rebrand manufacture for yourself, China’s factories are a dependable and trustworthy place to make it happen.
Why is copycat manufacturing such a big deal?
Without the ability to duplicate an existing product and do it better and for less money, manufacturing would never evolve. It’s the copycat culture that empowers the competition and allows for improvements. Quality may vary depending on the factory that implements the duplication, but one thing is for certain, it continues to improve with each iteration and becomes closer to exact resemblance of the real thing, or possibly even a better version. It’s not uncommon at all to find a better quality and better priced replica from a China-based factory. Many times, the replica comes from the exact same factory as the original product.
Communicating and negotiating with factories
Traditionally, a drawback of working with an overseas supplier would be the language barrier and communication deficiency. Today, that barrier has almost been eliminated entirely.
With Skype and other communication technologies, there are many ways to get your message across and communicate with your factory of choice. You can send emails and text chats, talk through VOIP, connect on a conference call, share screens with voice chat, create videos, or use virtually any communication medium you wish. Most factories have English speaking representatives there to solve your problems and answer questions. They understand the need for a personalized experience.
Being able to negotiate with factories is another key advantage to China manufacturing. The competitive nature between factories means that you can shop for the most affordable and most responsive factory to produce your products. You have complete freedom to shop around, so-to-speak, and resources like Sourcify help put that power in your hands.
How to find a manufacturer
When it comes to manufacturing a new product in China, there is a reason that so many businesses choose Sourcify. It’s one of the only tools that connects you with real, vetted factories, based in China, that have reputable histories with thousands of other entrepreneurs. It’s a platform that enables products to go from the innovative stages of conception and modeling, to a genuine reality. You can create better products for your business and save time by working with an exclusive community of factories that are the real deal, not some fly-by-night operation.
Conclusion
If your business could benefit from lower manufacturing costs, China manufacturing might be the single best move your company could ever make. There are hundreds of quality suppliers established in China with real factories. Consider outsourcing your ideas or products overseas to get the most out of your business and improve your bottom line.