The Advantages of Direct Manufacturing
Outsourcing in China By: John Roker
 In
today’s global economy, attaining a
competitive edge is vital. With many
companies competing in crowded marketplaces,
having to compete on price alone has become
a reality for many companies. Ensuring that
you are getting the best price possible for
inventory is a vital process that should be
equally as important to a company as
ensuring quality is consistent and delivered
on-time to customers.
With many global brands opting for to
directly outsource manufacturing to China,
other businesses are attempting to follow by
both taking advantage of Asian markets and
also ensuring they do not have the profit
margins of a broker to contend with as well.
Being able to locate and build relationships
with direct manufacturers is becoming
increasingly difficult with the rise in
brokers in the marketplace, however when you
do indeed manage to locate one; the
advantages of building a partnership with
them can be beneficial for both retailers,
wholesalers and brand holders.
China versus Other Developing Economies
China has advantages when it comes to
manufacturing over other Asian countries.
One reason for this is the experience and
education the country has in delivering
products that adhere to the rigorous
standards that are required by both western
legislation and consumers. Chinese labor is
also significantly cheaper than Indian
markets for example, where rapid inflation
is making it harder for Indian companies to
compete on price alone.
Outsource versus In-House Manufacturing
In business we are always told that we
should focus on our core competencies. What
does that mean? You should consider what
your business has that is unique over its
competitors. Is it an idea for a product, an
ability to offer cost-effective solutions or
even an intricate understanding of a certain
sector? Whatever it is that your business
has core competencies in, it is important
that your business highlights them in what
it does in-house and out-sources the other
aspects to companies that have special
skills.
For example, if your company has spotted a
potential market for a product, then they
should take advantage of the opportunity
that they have identified. However that does
not mean they should manufacturer the
product themselves. Ultimately, they should
follow the path that will allow them to
deliver quality at the best price; allowing
them to focus on their core competencies.
Therefore, if you are manufacturing in a
western economy then you should ask yourself
why. Why are you using an in-house workforce
that may be 10 times more costly than what a
Chinese company may be able to pay? Why are
you focusing on manufacturing when time
could be better spent on sales, marketing
and business development?
John Roker, a
proficient writer, writes for
http://www.metrotechglobal.com
Metrotech is the global leader in direct
outsource Manufacturing. Supplementary
editorials that were written by John Roker
about outsource Manufacturing are accessible
on
http://www.metrotechglobal.com
Other Advantages and Considerations:
1.
Rising quality, falling demand for brand
names
Many retailers are growing less dependent on
brand names in part because they, and their
suppliers, demand—and receive—good value
from Chinese suppliers. When two products
are equal in specifications and one is
significantly cheaper, a retailer can
provide great value to the end customer by
choosing the less-expensive product—as long
as the customer does not demand a brand
name. Many large, well-known Western
retailers are thus no longer willing to pay
premiums for brand-name products when they
can get products of equivalent quality for
less money.
2.
Better service
China's low product and labor costs are well
known; its advantages in services are often
underestimated. Today, when a small or
medium-sized importer needs labor-intensive,
value-added services, Chinese suppliers and
logistics service providers are capable of
responding. Applying labels or mixing
products on a pallet can be extremely
time-consuming and labor intensive. Since
Chinese labor costs a fraction of US labor,
it is worth examining whether a particular
service can be performed in China.
In Summary, with lower costs for products
and labor in China and an ever-growing
selection of more sophisticated logistics
services, you may find that the time is right to
explore sourcing in China. In fact, you may
find you cannot afford to pass up the
opportunity.
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