• ftr_soc1
  • ftr_soc2
  • ftr_soc3
  • ftr_soc4
  • ftr_soc5

What to Consider Before Outsourcing the Manufacturing to China

By Jesus David Cano Romano
July 10, 2017
China Manufacturing FAQ

Sourcing your manufacturing in China can be advantageous in many ways. To increase your success rate, your goal should be to form a strategic engagement strategy with reliable Chinese manufacturing partners.

One of the most obvious benefits of outsourcing is that it can enable your company to drastically cut operating costs. You no longer have to spend on machines and training, which often cut into your profits. But the benefits go much deeper. In some cases, you can enjoy additional tax incentives and other financial concessions for investors.

Manpower is possibly the most important resource especially for manufacturing, and is also one of the largest expenses shouldered by a company. Outsourcing to China can significantly reduce work force costs by between 30 and 80 percent, depending on the amount of labor intensity for your product. These are outstanding rates and will definitely lower the cost of production exponentially, thus improving your bottom line.

Outsourcing production for a new product can allow you to roll out your wares to the market much sooner than if you have to build your own factory from scratch, acquire all the manufacturing equipment, and hire and train your employees. Additionally, it can bring your production closer to the Asian and European markets, in case you are looking into expanding your operations and sales to these regions. When you have your manufacturing team based in China, you gain additional insights into other foreign markets. Many companies that manufacture products in the Asian region are also likely to diversify their reach and gain access to some of the local products—and this can help in improving your reach and growth.

However, you may run into problems such as quality control, low quality materials, and copyright issues when you decide to outsource to China. Hiring a management partner can solve this problem. Work with a company that can provide management support for your outsourced operations, acting as your eyes and ears while you are not there.