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The Basics
China is the world’s largest manufacturing country. In 2016, it produced $3.2 trillion worth of goods, according to World Bank data.
Manufacturing in China has been a long-standing practice for many companies, with the country becoming a leading exporter of products across a range of industries. This has resulted in many foreign companies setting up manufacturing plants within China’s borders to take advantage of its low costs and large skilled workforce.
China’s manufacturing capabilities are second only to those of the United States , while its economy is the second largest in the world behind that of the US. With this in mind, there has been considerable growth in recent years and it is expected that this will continue into 2020 when growth is predicted to reach 7 percent annually.
Why Choose China
China is the world’s largest manufacturer- in fact, it is estimated that China produces between 20% and 30% of all goods worldwide. It is also the world’s largest exporter, making up nearly 15% of global exports.
China accounts for 32 percent of global plastic materials production in 2021, making it the world’s largest plastic producer by far.
Many companies are choosing China as a manufacturing location because of its large population, low labor costs and well-developed infrastructure. There are also many reasons why you should consider manufacturing in China:
China produces an array of goods for export to countries around the world. It has been able to do so because it has an abundance of natural resources and cheap labor force. When you manufacture in China, you can take advantage of this by outsourcing your production to local factories that specialize in producing products such as clothes, shoes, electronics and toys.
China offers consumers a variety of goods at a lower cost than other markets around the world due to low wages and low costs associated with production facilities and transportation costs. The average hourly rate for manufacturing workers in China was $1.50 per hour in 2013 which was significantly less than other countries such as Brazil ($3) or Mexico ($2). These low wages allow manufacturers to keep their prices competitive while still turning a profit on their products sold overseas
The Advantages and Disadvantages of Manufacturing in China
For more than a decade, China has been the destination of choice for companies looking to manufacture their products. The country offers low costs and an abundance of skilled labor. Many companies have already made the move, but there are some disadvantages that you should also be aware of before deciding whether or not to set up shop in China. The production of injection molding in China reached 30.72 million tons in 2021, an increase of 1.77 million tons or 6.1% from 2020, and is expected to reach 32.1 million tons in 2022.
The advantages and disadvantages of manufacturing in China are very different depending on the type of product you plan to produce. But one thing is certain, if you want to create a sustainable business with a high return, you need to be able to manufacture in China.
pros
Cost Savings
Manufacturing in China can save companies a significant amount of money. This is due to the fact that labor costs are significantly lower than they are in the United States or Europe. In addition, companies do not have to pay as much for shipping since they can ship their products by sea rather than air. This means that less fuel is used and fewer emissions are produced when shipping products across the ocean instead of across the country or continent.
Availability and Quality Control
When manufacturing products in China, there are many different options for finding suppliers who can meet your needs and provide you with quality materials at affordable prices. These suppliers will often have years of experience working with other companies from around the world, which allows them to offer more competitive pricing than you might find if you were trying to source materials locally or from another country where English may not be as widely spoken or understood.
Speed and Flexibility
When manufacturing products in China, it is possible to get your products quickly because there are so many factories producing the same products. In addition, Chinese factories are flexible and can often change their production schedule or adjust to your needs quickly because they understand how manufacturing works. When it comes to sourcing materials for your project, you may need something that is only available in one place in the world. This is where the problem starts. If you are trying to source materials from one country and manufacturing from another, it can be very difficult to get everything in place quickly enough for your project. You may also find that the factories or suppliers are not flexible enough to adjust their schedule or comply with your needs, which could seriously delay production.
Cons
Manufacturing in China is an attractive option for many companies. The country has a huge population, low labor costs, and a strong manufacturing infrastructure.
However, despite the advantages, there are also some disadvantages that you should consider before making the decision to manufacture in China. Here are some of the most common:
Foreign investment restrictions
Foreign investors must partner with a Chinese company to set up a joint venture or invest in an existing company. In addition, foreign companies are limited to 49% ownership of their joint venture or foreign-invested enterprise (FIE), and are forbidden from investing directly in certain industries such as banking and telecommunications. These restrictions may make it difficult for foreign companies to grow independently in China without diluting their brand identity by partnering with local partners.
Language barriers
A language barrier can cause delays in communication between management teams during production processes and delivery schedules can be difficult to maintain due to poor translation skills on both sides. Additionally, Chinese workers may not feel comfortable working directly with international teams due to cultural differences which can also lead to problems with efficiency and productivity levels during production processes.
Slow shipping times
One of the most annoying things about working with Chinese manufacturers is the amount of time it can take to get items shipped from factory to warehouse — or worse, from one warehouse to another. Since most factories in China are located on the opposite side of the country from where you live and work, this means that you’re going to have a lot of delays if your product is made there — especially if it contains electronics or other sensitive parts that require testing or certification once they arrive at port. Some companies have started using the Southern California Logistics Airport just north of Los Angeles as an alternative shipping hub because it offers better access to major ports like Long Beach and San Pedro than China does.
Will China Manufacturing Fit Your Business?
The first question to ask is whether or not China manufacturing will fit your business model. Here are some questions to consider:
Do your products require customization? If so, you’ll need to find a factory that can accommodate your needs and still provide the product at an affordable price point.
Do you have time constraints? Depending on what type of product you’re looking for, it may take longer than expected for a manufacturer to produce your goods. Be sure to factor in these delays into your timeline when ordering from overseas.
Can you handle shipping logistics? You may be responsible for getting the finished product from China back to the U.S., so make sure this is something you can handle before making an order!
How to Get Started With Manufacturing in China
Here are some things you should know before doing business with overseas manufacturers:
You’re not alone
There are thousands of other companies who manufacture their products in China and have great success doing so. The first step is reaching out to a manufacturer that specializes in your product category. This way, they can help guide you through the process of creating your prototype and providing quality assurance checks on the final product before it’s shipped out.
Do Your Research
Before sending out an RFP (Request For Proposal), make sure you know what you want and have a clear idea of what your expectations are. Also, make sure your product will meet all safety requirements, both at home and abroad. If there are any issues with your product or its packaging when it arrives at customs or elsewhere along the supply chain, it can cause delays that affect production time and costs—not to mention your reputation!
Communication is key!
Even if you speak fluent Mandarin Chinese, it’s still important to use an interpreter or translator when communicating with your manufacturer because they may not understand technical jargon or acronyms used by engineers and designers from other countries like America or Europe. That said, do not underestimate the importance of having good communication skills yourself — especially if English isn’t your native language!
Find a Good Supplier
Once you know what you want and what kind of product you’re looking for, start researching potential suppliers. Do not just search online; get on the phone or go see them in person to find out if they can meet your needs. They should be able to show previous work samples (and preferably videos) of their products being made so that you can see how well-made they are before placing an order . You should also ask them about their quality control and how they ensure that no defects slip through. If you are using a factory which is outsourcing parts of the process, make sure they can provide you with samples of all materials used in making your product.
Contact a manufacturing expert for a consultation
Before you pick a manufacturer and place an order, it’s important to get advice from someone who has experience working in China. A consultant will help you identify all of the factors involved in making your product and advise on how to go about finding the best manufacturer for your needs.
A manufacturing consultant will also be able to help you avoid common mistakes that can lead to expensive product delays, quality issues, or even worse: a failed product launch.
Takeaway
In today’s globalized economy, more and more manufacturers are choosing to move their businesses overseas. This is a trend that isn’t likely to be going away any time soon. If you’re one of those businesses, then there are many things to consider when you decide to manufacture in China. By stepping ahead of the learning curve by educating yourself now, you can greatly increase your chances of success—no matter which type of manufacturing business you have.