What lessons can we learn from big corporations who have successfully started their
manufacturing operations in China?
The Good News About Cost Cutting:
Operating costs such as utilities and rent are typically lower than in the U.S. Construction
costs are also significantly lower. The abundance of suppliers keeps prices down
for the manufacturer.
The Bad News About Cost Cutting:
Westerners going in expect huge savings in manufacturing costs. While it is generally
true that labor costs in the China are lower than those of the U.S., labor cost is
only a small component of the total manufacturing costs. There is also potential
skill shortage in your industry. Utilities such as electricity are often in short
Automotive and Telecom are at its infancy from an industry development perspective.
If you are in an industry where you'll bring in new manufacturing technology, beware
that the Chinese are experts in Reverse Engineering. They'll purchase one of your
products, take it apart, put it back together and figure out how you produced it.
Then they go and copy it. Now you have a knock off on your hands.
For a small business owner who is interested in import from China, why is Contract
Manufacturing China of interest? Global manufacturing has been a manufacturing strategy
for large corporations for many years. Moving a plant or starting a plant in China
to produce goods to be shipped for consumption in western nations has been done successfully.
As a small business owner, this may the furthest from your mind. You just want
to get the goods from someone in China and sell them in your own country. However,
as your business grows, sooner or later manufacturing your own goods in China might
make sense. You should understand the pros and cons of such an option of Contract
Contract Manufacturing China - Lessons From The Big Boys