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Main Reasons Why MNCs are Outsourcing Manufacturing to China

By Conor Kelly
August 9, 2017
outsourcing manufacturing


For Multinational Corporations (MNCs), outsourcing manufacturing usually equates to reduced costs. The majority of companies outsource manufacturing services to countries like China because of the incredibly low cost of production overseas. China is the largest manufacturing nation in the entire world, accounting for as much as a fifth of the global market. This is where countless companies have their goods built and/or assembled, source materials for manufacturing, and purchase supplies for production. Shanghai remains one of the most relevant manufacturing centres for high quality electronic devices, among many other products, mainly because it is where skilled labour and exceptional engineers needed to ensure high quality production are located. China is comprised of different regions specialising in different types of manufacturing, ranging from automotive to textiles, plastics, and a lot more.

Below are other significant reasons why China is the country of choice of many MNCs when it comes to outsourcing manufacturing:

  • Labour costs are substantially lower in the country. With labour being one of the biggest expenses of any manufacturing business, cutting labour costs is a sure way to secure lower overheads and channel capital to other product development costs.

  • China’s products may be cheap in price, but never in quality. The country prides itself in providing excellent quality products for cheap and factories provide the best discounted rates for mass orders, meaning great value for the money you invest.

  • Outsourcing laborious and tedious parts of production also enables companies to focus its resources on areas that can help increase profit and revenue. Outsourcing minimises manufacturing costs and at the same time increases revenue as resources are better focused on marketing and sales efforts, which results in increased profit margin.

  • Finally, China is an unbeatable choice for manufacturing services because of the wealth of raw materials the country has. Outsourcing your production line to China means access to a diverse selection of parts, materials, and skills available in the country.