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Outsourcing Manufacturing to China – A Rising Phenomenon

By Jesus David Cano Romano
August 22, 2016
outsourching manufacturing to China

It was a few decades back that China emerged as a superpower and opened itself to the world. The smarter companies in various industries saw the opportunity the country provided and set up operations there to leverage its large workforce. This gave them the edge and soon these firms emerged as the strongest players in their respective industries.

The outsourcing manufacturing saga has continued. The current outsourcing market of China has experienced an annual growth of up to 30%, higher than that of any other economy. Economists have stated that the growth and innovation in China-based companies have aided manufacturing of larger volumes of product at a minimum cost.

There are ample reasons why outsourcing manufacturing to China makes business sense even now.

The first and foremost reason still remains as cost. Companies have been able to cut down on the cost of labor, raw materials, and overall production by up to 50% by associating with Chinese companies. It is rightly said that nothing is impossible in China – dedicated team works diligently to complete client work within the assigned deadlines. As technology advances, the development and manufacturing lifecycles shorten further. This, in turn, continues to reduce the cost of services and manufacturing.

China has now become the hub of development and production. It has the capability to cater to the development and production needs of an extensive variety of products. Companies strategize on opting for mass production from the country as it helps them turn out exceptional quality items. The manufacturers have evolved a methodology to develop risk-free products. The companies develop a prototype and test the design in a real-time environment. If the design meets the client specifications, it is cleared for batch production and finally full-scale production. This process has streamlined the product development and manufacturing processes to a scale that is not seen in any other country.

One of the key concerns that businesses had when they initially thought of outsourcing to China was the product quality. There was a thought that the Chinese companies could not deliver the quality that the client brand stood for in the minds of the end consumer. The country’s manufacturers have shown that to be an unfounded fear. Time and again, the products manufactured in the country have proven to be the best found in the market. More and more businesses have realized this and as firms from emerging market economies flex their power in the international arena, they have turned to China to give them the quality they deserve.

Outsourcing to China is seen as one of the most viable options as it allows the managers to collaborate and strategize the manufacturing process by forecasting results and mitigating risks. It is not a single input function wherein the development and production process is carried out single-handedly. Outsourcing has reduced the risk involved in dealing in international markets. Moreover, it has helped firms to formulate a customer oriented market mix that is executable and extremely profitable.

Outsourcing manufacturing to China remains a key facet of the global economy. More and more companies from around the world are looking to use the country’s capabilities in product manufacturing to stand out from the crowd. Using Chinese manufacturers to bring new products to market or simply manufacture tried and tested products has become a crucial business strategy that firms cannot ignore anymore.