China is the world’s largest manufacturer and its labour costs are still very low compared to western countries. For that reason it makes a good choice for manufacturing location, particularly if you’re making products with a high labour component or need to order in bulk.
But as a foreign enterprise it’s all too easy to overlook vital details when you’re promised the earth by eager manufacturers and have a bargain in sight.
Here are some of the important details Red China Business can help you with:
Location, Location, Location
Before deciding on the best way to go about making your goods it’s just as important to decide where you want them made.
Distance from the nearest port will impact costs and the overall efficiency of your operation. Also some regions offer far better local government support to foreign enterprise than others.
Availability of skilled labour is an issue in some areas too. Labour shortages would make recruitment for a new operation difficult. Equally, they’ve been known to disrupt third party manufacturers’ ability to deliver what they promise.
How do you want to go about making your product?
There are several routes you can follow to setting up a manufacturing operation. Each has its pros and cons.
If you’re a small business you may simply prefer to contract third parties to make your product and organise the shipping for you.
Alternatively, there are three recognised ways to set up your own official presence in China. (will send more specific details)
If you’re simply contracting a third party or undertaking a joint venture – you’ll need to follow a due diligence process. Amongst other things you should establish financial credentials. You should also make sure that you’re dealing directly with a manufacturer and not just some middle man masquerading as a factory owner.
How detailed are your instructions?
Clarity and attention to fine detail on your product specifications are vital to avoid expensive mistakes and costly delays. To prevent misunderstandings you should have your specifications translated, if necessary, by a suitably qualified technical translator. The company representative with perfect English who goes over your requirements with you may turn out to be far removed from the manufacturing process itself. You should also arrange to see product samples before giving the final go ahead.
How seriously do they take you?
All Chinese companies want long term repeat business. So once you’ve found a high class facility you must understand that there may be others keen to have their products made by the same people. For that reason it’s important to create the right impression.
Turning up to meet the management dressed in holiday casuals is unlikely to convince anyone that you’re the next Steve Jobs and need to be taken seriously as a long term partner. Fail to convince factory bosses that you have a good customer base and they may simply use you to take up some temporary slack while they wait for a bigger fish.
If you’d like to learn how you can take advantage of China’s low costs and fast turnaround to manufacture your products – contact Sarah Yue.
