Today, China is considered as the manufacturing hub of the world. It has a very high population, and as a result, labour is easily available at the lowest cost.
Besides that, over the years China has made tremendous improvement in its infrastructure and as a result, created a huge production capacity.
Also, the Chinese government has taken special care in the education and training of its population and as a result, there are very high numbers of skilled workforce available.
Today, China outranks almost every other country in its manufacturing output. Virtually everything that you use today is most likely manufactured in China.
Nearly 80 to 90 percent of the different goods sold on Amazon's US marketplace are imported, with the majority of them coming from China.
It can be intimidating and confusing to buy bulk items from China if you have just started your company or have never manufactured in China.
Let us, therefore, first look at the various pros and cons of going for manufacturing products in China. It is always important to select the right supplier in China for your business to succeed. Therefore, you need to make the right decision for your company.
Pros of manufacturing in China
1. Lower production costs
The major benefit of having your items manufactured in China is that you can lower the cost of the products without having to produce as many of them.
As a result, your profit margin will increase and you will have more money to invest in other aspects of your business.
2. Market expansion
Making products in China gives you the opportunity to quickly enter new international markets.
There is a good probability that Chinese consumers will also be interested in your products if they are produced there.
3. High output in less time
Chinese factories are able to quickly fulfil huge orders for products. This is due to China's ability to afford low-cost labour and its enormous factories, which is a good reason to buy bulk items from China.
4. A large number of manufacturers to select from
You might not have many choices of the manufacturer, if you decide to have your products made domestically.
However, because there are abundant numbers of manufacturers in almost every industry in China, you can select the best one for your business.
While surely there are many advantages to getting bulk items from China, there are also a few disadvantages to be aware of.
Cons of manufacturing in China
1. Communication and language difficulties
If you are unfamiliar with the language or culture, manufacturing in China will be quite challenging.
To make the process simpler, if you don't speak the language, it is advised that you hire a China sourcing agent.
You must be aware of this when dealing with Chinese people because their corporate culture differs greatly from that of the West.
2. Quality control
Using Chinese producers makes it exceedingly difficult to produce and maintain a high-quality product. You don't truly know the quality of the goods because you don't go there very often or at all.
The samples might give you a general idea, but you won't fully know until your final product is manufactured and delivered. To maintain a high-quality standard, you can arrange a pre-shipment inspection by third-party business or pay visits to the factory to inspect.
3. Intellectual property infringements
China is renowned for its problems with intellectual property protection. When it comes to trademarks, plagiarism, and copyright issues with your items and your manufacturer, you must exercise extreme caution. To sign NDA with your supplier or manufacturer in China will be a good choice.
4. High MOQ
China has a large number of manufacturers that concentrate on mass-producing goods, therefore when dealing with foreign companies, they could demand a large minimum order quantity. Negotiation of MOQ is not easy, but you need to bargain with the manufacturer or find another company if you are unable to buy that much.
How to outsource your manufacturing in China?
1. Finding suitable Chinese manufacturers
To start with, find a large number of suppliers and try to access their business info.
You have several options such as:
a. Your business contacts
You can contact your own business colleagues, who must have dealt with certain Chinese suppliers or have some contacts.
b. The Internet
The following B2B marketplaces can offer you key business info and other details for buyers such as:
Made in China
c. Meet at trade fairs
You can also meet potential Chinese manufacturers at various trade fairs in your own country too.
d. Sourcing agents
Another good idea can be hiring a China sourcing agent who is well aware of the Chinese market and can offer you great help.
e. Contacting the supplier
After you have shortlisted a few potential companies, you can communicate with them via email. You must use your business email along with the name and your website URL.
One of the biggest issues that you may face when manufacturing in China is getting scammed.
It can be anything like:
Poor product quality
Long shipping times
Businesses that are outsourcing manufacturers that they have never done before, can always get scammed or taken a ride of. However, you can stop this from happening in the following ways:
a. Look at reviews
When researching manufacturers check if they have better reviews from other companies that sell similar products and are also of a similar size to yours.
b. Check business licenses
Manufacturers in China need to register with the Chinese government to get a unique registration number. You can verify their registration number from the Chinese government website or by communicating with the Bureau of Industry Commerce.
3. Conducting a factory audit
After having accepted a quote, either you or your sourcing agent must conduct a factory audit. A thorough check must involve getting a proper feel of the factory.
You can try to access the following:
What production equipment/facilities are available?
What manpower available?
What is the experience of the company?
What processes are followed?
What is their management structure?
How are the working conditions?
What is their attitude about social responsibility?
By looking at the attitude of the company owner you can judge whether you should proceed with the company and worth partnering with for a long-term basis.
You should be aware of what to look for during your visit to the manufacturing facilities.
You can get assistance from an expert sourcing agency without running the danger of receiving subpar goods or services.
4. Obtain a sample
A sample of a product serves as a yardstick for quality. But because it usually always has a high level of quality, they refer to it as the "golden sample." When obtaining a sample from the supplier, bear the following in mind:
Speak with the production manager directly to make sure they are aware of the desired outcome for the product.
Send a follow-up email with complete technical details, payment information, and a timeline.
After the sample is finished, consider scheduling a video conference with your supplier to examine how it appears before it is shipped.
5. Negotiating with manufacturer
Remember the following while negotiating the price:
Always calculate the landed cost instead of the quoted price
Be aware of the market price in your country and also in China
Tell your annual requirement rather than your present requirement.
Focus on delivery, quality, and other business terms
Also, discuss long-term commitments
6. Ensuring quality
One of the major challenges is how to manage China quality control, but you can address it by taking a few easy steps.
You should be as specific and as detailed as you can with the needs and specs for your product because there is obviously a language barrier between you and the Chinese manufacturer.
Visits to your Chinese manufacturer can be one of the best ways to ensure that you will receive high-quality goods from them. This will allow you to observe their quality control procedures in person and determine whether they are appropriate for your product and your company.
If you cannot afford a frequent visit to your manufacturer in China, then hire a third-party company to inspect the factory and offer you a detailed report.
Another alternative can be hiring a sourcing agent who can coordinate all these activities on your behalf.
7. Maintaining a good relationship with the manufacturer
Developing and maintaining a cordial relationship with your Chinese manufacturer is very important for your success.
You can achieve this by:
a. Focusing on effective communication
It is important to be in regular touch with your Chinese manufacturer and exchange information.
b. Being respectful of cultural differences
You are working in a country where business culture is entirely different and hence you must be respectful of that difference.
c. Pay on time
Make sure that you make your payments without any delay.
d. Being honest and upfront
You must be honest in all your dealings and also be upfront to let him know your expectations.
Getting manufactured bulk items from China can surely be stressful, nerve-wracking, and frustrating too. Also, it is going to take up plenty of your time to stabilize. However, if you move forward systematically, then everything will become easier and less intimidating.