For many US-based companies, manufacturing products in China means maintaining quality while incurring fewer overhead fees. Outsourcing manufacturing has long been a successful strategy in business. While there are downsides to outsourcing production to China, such as communication difficulties and logistical issues, there are also a myriad of benefits to consider.
Lower Production Costs
Lower production costs when compared to manufacturing in the United States is generally the primary reason that businesses shift production to China. Having your product made in China is so much cheaper that, even with the substantial shipping costs involved in getting your product on US shelves, your company can still save a considerable amount of money.
This translates to not only better margins for you, but also lower prices on your products. This means that you will ultimately sell more, which will help your bottom line even more. If you are operating in a crowded market, outsourcing can be the thing that puts your company on top.
This goes without saying, but the sooner you can get your product from the planning stages to retail shelves, the better. So many companies have their products made in China because they are the top manufacturing country in the world with 28.7% of global manufacturing output. And with 1.4 billion people, there is no shortage of workers, either. This also means that it is much easier to scale production if you are manufacturing in China.
Easier Scaling
If your company grows big enough, fingers crossed, you might consider expanding to other markets. The Asian market offers a lot of opportunities. If you are already manufacturing in China, expanding into those surrounding markets is that much easier.
We are not just talking about logistics, either. Obviously, moving products around Asia is much easier when they are made right there in China, but establishing business relationships with those markets is easier, too. China alone is a huge market that you should not have any trouble expanding to if you are already making your products there.
Sadly, many US-based manufacturers will not work with companies that haven’t already established huge distribution contracts. It is simply a financial issue. They need to take large orders to ensure that it is financially viable. China, however, is so crowded with factories and workers that small companies have much less trouble finding someone who will take on smaller manufacturing orders.
Order minimums can run a lot smaller in China, so if you are a small company that does not possess the overhead to place large orders right out of the gate, you will have much better luck getting your product made in China as opposed to stateside. This is not a critique of American manufacturing companies, but rather the truth of the situation when it comes to both companies’ respective industries.
Final Thought
If you are looking to produce your goods in China, be aware of the pitfalls that come with that, but know that it can be a very beneficial option for small businesses.
