China has grown to become a big economic power in the world over the past decades. With its influence in international trade, it is not surprising that many reputable brands are now outsourcing their productions to them. The large population of China and low wages are the two factors that play an important role in the development. China is not only good in manufacturing low end products but they also have a few factories that produce higher value products. The following are the 10 advantages and disadvantages of outsourcing manufacturing to China.
Low Production Cost
The main advantage of outsourcing to China is the low production cost. Many companies decide to outsource to China because the products quality look the same and they get the same sale numbers. You can significantly cut down the cost when you place an order in bulk to a factory in China. It keeps your business going and you continue to be able to make money when you have a low capital. New businesses that have small capitals will often look to China to source their products. China is a leading exporter and they have a vast knowledge in producing various types of goods. This is why they are able to produce them in low cost.
Smooth Expansion of Your Business
Outsourcing to China makes it possible for you to expand your business. You want to launch a new product but you can’t afford to have them manufactured locally. On the other hand, you could succeed if you outsource to China because they can make the production affordable for you. You may want to consider visiting China trade fairs if you are interested in outsourcing to China. You will be able to diversify your product offerings and tap into the international market without any obstacle. There is no need to worry about the lead time because China can deliver the goods fast. They have fast shipping option if you are concerned about receiving the products fast.
Superior Products Quality
China offers superior quality in the products that they manufacture. As a newbie, you may want to try a few factories to compare the quality before making a decision. The superior quality of China made products means that you don’t have to stock up brand name goods in your retail store. You can stock up similar products that are made in China to save money in the inventory. It is a great value to you as long as your customers are happy buying cheap goods and not demanding for brand name goods. There are many large retail stores in the West that rely on China to get their products for stocking up their stores’ inventories. It is much cheaper compared to having to pay premiums for brand name products.
Specialization in Product Duplication
You like a brand name product and would like to come up with your own line of products with somewhat similar features. In this case, China is the best candidate for outsourcing because they are known for their product duplication capability. China can produce duplicate products at a faster speed and more accurately than other places. It is for the product duplication specialization that China becomes famous in the first place. They frequently duplicate brand name American products and sell them as replicas. The replica significantly cost lesser because they can easily obtain a cheap labor source.
Have Lots of Parts and Raw Materials
China has a rich resource of parts and raw materials which make it easier for them to create the type of product you need for your company. They can easily obtain the parts at cheap prices so that you don’t have to spend lots of money to import them. They can also create a design based on your specification in case you don’t have a design to provide them. They have designers who will create designs for your product free as long as you place bulk order with them.
Easy to Negotiate with the Seller
When you outsource to China, there is the advantage of negotiating with the sellers. Often, they will give you discount when you ask them to reduce the price. They may already have discount available for different tiers of bulk orders. However, beware of companies that offer unbelievable quote for your orders as they can be scammers. Usually, a trustworthy supplier will provide a reasonable quote. You can request quote from multiple suppliers to get an idea on the right price point for the products you want to outsource.
Focus on the More Important Areas
By outsourcing to China, you will be able to focus on the more important things such as sales and marketing. Focusing on sales and marketing will also help to increase the profit margin. If you were to outsource domestically, you will find yourself spending lots of time discussing with the supplier about the product. You have to drive to the supplier store or talk on phone to discuss about the products. However, if you order from China, you can discuss about the products via instant messenger which helps you to save money on petrol and save time on driving.
Beware of Scammer Suppliers
Not all the Chinese manufacturers produce quality products for their clients. Some offer lower quality goods but you can avoid outsourcing to them by using an established site to place an order. Established wholesale sites only list suppliers that have tried and tested portfolio. Before you place order, you can request for a few samples to be sent to you. You can also take a look at the feedback to get an idea on the quality of the products that they offer.
Language Difference Creates Communication Barrier
Another disadvantage is the language difference which makes it difficult for you to communicate with the China supplier. Due to language barrier, you can easily make mistake in the instruction you give to the supplier such as product specs. In established china outsourcing sites, the supplier may have a team of English representatives to ensure accuracy of communication on the order details with the clients.