China Manufacturing: Benefits of Manufacturing from China
If you are a manufacturing unit and looking for quality production that does not cost you much, then here is a guide to direct you to the right place. It is but obvious that businessmen want a perfect balance sheet along with profit and loss account where they incur low expenditure on labor and raw materials. Typically, this can be difficult to achieve domestically, if your manufacturing unit does not outsource their production from China. In the past few years, China’s outsourcing market has grown by around 30 per cent. Outsourcing to China has become one of the popular choices for companies who used to have manufacturing in house. To import from China by conducting product sourcing with the help of a sourcing company, international buyers is not only purchasing general merchandise but more importantly be able to do customized design with the OEM service offered by those private label manufacturers who has the R&D capabilities to create China prototype for them. The statistic data suggests that China is the producer of 80% of world’s air-conditioners, 70% of mobile phones, 60% of shoes, etc. Moreover, the Government of China has been very supportive by providing subsidies in addition to incentives and sound infrastructure to its manufacturers. Apparently, this has encouraged local manufacturing units in China to compete with giant brand names in the global market. The current scenario is that China manufacturing units have captured almost half of the world’s market. Known as the ‘Factory Asia’, China’s grip is further strengthening and if the trend continues, it would not be too long when the entire world’s good are produced in China alone.
Important points to get products manufactured from China
Usually, business concerns reach out to China for the obvious reason of lower manufacturing cost. However, there are ample reasons why you should choose China to start the manufacturing process apart from low-end production.
The last decade saw China rising as one of the major economic powers in the world. Ever since China has commenced trade and commerce internationally, it has surfaced as the world’s second largest economy by nominal GDP and the largest economy by purchasing power amongst all the countries in the world. China is giving a good competition to even the most powerful countries in the world. Businessmen find it profitable to invest in China manufacturing unit.
Low Production Cost
It is no hidden secret that China manufacturing is undoubtedly a low cost venture. No wonder, all the reputed brands in the world are dependent on Chinese factories for manufacturing their products. Listed below are few basic reasons that support low manufacturing cost in China.
- China has cheap labor availability in comparison to other countries of the world.
- China offers inexpensive raw materials as they are locally produced.
- China implements taxes only on value added services (VAT).
- China facilitates mass production which brings down the cost considerably.
- The Chinese currency, Yuan is lower than US dollars.
Greater Production in Minimum Time
Since China manufacturing is able to afford cheap labor, it can implement greater number of labor to expedite production process which lower the manufacturing period. Besides, continuously manufacturing goods on the same line in terms of mass production can assist in reducing production time. To increase the manufacturing production capacity, China has developed production scheduling method.
When production is based in China, international firms find it easy to expand their business on the land where they are manufacturing their products and simultaneously enlarge their demand in oversea market. It helps them to do their ground work and build demand and supply chain in the local market. China being the most populous country in the world has the potential to become their largest consumer country. These companies not only enjoy low production cost but also get direct market access to Asian customers. Furthermore, these companies do not have to incur the expenditure of shipping and transporting the goods, when they are able to establish consumers in China itself. Hence, it not only increases the sale of their products but also enables them to reap higher profit.
Higher Demand of Products
Consumers are inclined to purchase quality products at low cost. Economic phenomenon states that demand of goods rises if the prices fall and vice versa. When the cost of manufacturing is low, the company can sell the products at a competitive price in the market. Such companies who have manufacturing units in China can afford to sell their products at low price in comparison to their counterparts and still fetch greater financial returns. This will escalate the demand of their products and inflate their profit. The greater demand would result in greater sale of products and thus yielding a greater profit. The demand curve of your product would continue to rise high as long as market price is lower than your competitor’s products. This can be possible only when you have a manufacturing set up locally in China. Therefore, companies who establish China manufacturing have an edge over the companies who do not.
Benefits of newly established business concerns
Setting up a China manufacturing unit could be one of the best decisions taken by any newly established business concerns. Due to low labor cost and reasonable cost of raw materials, having a manufacturing unit in China could prove to be highly advantageous and gainful for startups as they are more likely to save on wages paid to labors and workers, operating expenses, trade expenses, export and import duty, etc. In the first year of their establishment, they would be able to reap greater returns of net profit. They would be in a sound position to further invest their profit to expand their business and get a strong hold over the market and their consumers. The startups companies would be able to spread their wings to Asian countries and increase their sale. China, with over 1.3 billion current population is the largest purchaser in the world. By hiring local executives at low salary, the startup companies can step into the global market and establish themselves as international company within a span of a year.
Science and Technology
Advancement in research and development has contributed to globalization of science and technology. China is making heads turn with their increasingly sophisticated research and development and development in science and technology. This has served as an advantage to companies who want to manufacture their products in China. High-tech manufacturing, sound infrastructure and skillful commercial application are attracting more and more business concerns to invest in China manufacturing. For example, the city Shenzhen in China is known as the hub for electronic manufacturing services and China pcb manufacturing and assembly. Even Apple has its own factory facilities over there and all your iphones are manufactured in a company called Foxconn. Inside the city, Huaqiangbei electronic market is also the largest wholesale market for electronics sourcing.
As per latest reports, Chinese manufacturers are more likely to offer you better services than any other local manufacturer. Chinese manufacturing units have no qualms about working with small entrepreneurs. This is what makes them different from the crowd and ensures high services from their side.
Reliable Tips for Manufacturing in China
If you are willing to venture in China manufacturing industry, then there are some tips that can come handy.
Relationships Rule the Market
Chinese working industry is solely based on relationships. To maintain a good business with manufacturer in China, you need to first develop good relations with them. Foremost, you can visit the factory and try to develop an understanding of their manufacturing process. These efforts to maintain good relations with the Chinese manufacturers would get you many success stories to remember.
Communication Problems do Exist
Language is a major problem while working with China manufacturing units and you need to understand this fact. Moreover, you can also take the help of trading companies that can act as a translator between you and the factory owners. Moreover, these trading companies can also assist you in finding the right factories as per your demands and requirements. However, miscommunication can lead to frustrations on both the sides. Thus, it is advisable to pay utmost attention to language when you decide to work with manufacturers in China.
Inspection is imperative
Product inspection is imperative and should not be ignored at any cost. Moreover, it is also regarded as an essential and effective step to assure quality of the product. Regular inspections would also give out an impression that you would not compromise on the product’s quality no matter what.
However, you need professional help if you really want to succeed while venturing into manufacturing in China. One such reliable firm that can lend you a helping hand in understanding the China manufacturing industry is CNSourceLink.
CNSourceLink – Your Comrade in Initiating Manufacturing Process
Initiating a manufacturing business in a new country is not an easy task. You need hard work, dedication, spirit to take on the challenges, and of course professional help of experts. This is where CNSourceLink comes into picture. They are basically a sourcing firm in China that can lend a helping hand to firms or clients who want to start manufacturing of products in China and sourcing from china.
Compared to other China sourcing agent or China import agent, The firm holds ample of experience in the field and has been assisting many clients. Moreover, their expertise in understanding the trends of China manufacturing industry is just fantastic. This is the reason that they have been so successful in their field and have created a good reputation for themselves. Moreover, their contacts with locals and good relationship with manufacturers and suppliers can help you in establishing your business quite easily. This is a firm that has really stood to its name and mission and is bound to reach new heights soon.