China has taken over as the capital of manufacturers. However it is important to have the right information before you make it your manufacturing base.
Supplier Base: A few quick facts: China’s supplier base is incredibly expansive. While the country imports a substantial portion of sub-components and materials from other countries, a great deal of assembly work for consumer products is done in factories in China. Sourcing of apparel, textiles, consumer electronics, plastics, toys, car products, lasers–China offers manufacturing networks supporting a very wide swath of industries. This allows the country to achieve economies of scale because larger clusters of factories are surrounded by clusters of supporting factories (think materials, sub-assemblies), which helps to push every factory’s costs down and make supply chains more efficient. In addition to an established base of factories, China’s infrastructure (roads, ports, bridges) is robust. This means more efficient transportation of goods. If you want to source a contract manufacturer for a product, chances are you can find one in China. Whether it is the right contract manufacturer for your company is a question that needs more exploring.
Increasing Sophistication and Capabilities: Many of China’s factories have improved a great deal with respect to manufacturing capabilities, efficiency, management sophistication, and customer service. It’s possible to source factories offering value added services in design and engineering related areas and reduce total product development and total lifecycle costs.
You also need to be fully aware of the benefits that you stand to gain. Of course the obvious one is the low cost. There is also a high output. The work is done quickly. The service you get is also top notch.
- Lower costs
Yep. We all know this one.
And, yep, there are probably some instances where, when you factor in shipping and duties, the costs of manufacturing domestically are possbily competitive. But, generally speaking, it’s cheaper to manufacture in China (and for a variety of reasons). Not much more needs to be said.
- Better Service
Admittedly, I’m writing this column as the opinion of ONE person with experience. And, in MY experience, Chinese manufacturers are far more likely to give you better service from the outset as a small startup than domestic manufacturers.
- Higher Output/Quicker Time
I never experienced a factory in China that was unable to produce a large order for me. Most times, when a Chinese factory tells you they can produce your order in four weeks, they produce your order if four weeks.
Sourced from: https://www.entrepreneur.com/article/269783
Is China the only option businesses have when it comes to affordable manufacturing? The answer is no. Mexico is also in the list. After all the prices are almost the same. They are also not in a hurry to finish up. They simply want to give you value for your money.
Is Mexico the New China?
About two years ago, Melissa Palmer, CEO of a company called Hoopnotica, made a shocking discovery. Chinese factories were producing knockoffs of her company’s $50 travel Hula-Hoops and selling them on Alibaba and other international wholesale websites on the cheap. Palmer, a partner in the $1.5 million Venice, California-based company, sent cease-and-desist letters to the sites, with little success. “It’s infuriating,” she says.
Costs Might Be The Same
Mexico’s wages are 40 percent higher than China’s, at about $3.50 an hour. As a result, overall production costs are comparable in the countries, once you factor in Mexico’s lower transport and customs cost. But Chinese factory wages are climbing 14 percent annually. Michael Zinser, a partner at Boston Consulting Group, expects them to be 25 percent higher than Mexico’s in five years.
Slower Is Better
Many companies make the mistake of moving all of their production to Mexico at once to start reaping the benefits, says Scott Stanley, senior vice president of NAPS, a San Diego company that helps businesses set up production in Mexico. Instead, Stanley advises clients to begin by producing simple items at a new facility, then gradually introduce new lines. By doing so, you will minimize initial risks, he says. You’ll also be able to work out production kinks one product line at a time, avoiding major business disruptions.