China’s manufacturing industry has earned a global reputation for excellence and breadth. To the point where many well-known companies around the world use it as their primary factory.
However, manufacturing in China can seem difficult and intimidating to most enterprises. How do you even begin? Where do you even begin looking for a reliable manufacturer? Do you think you can trust Chinese factories to produce high-quality goods?
We have the answer if any of these issues are keeping you up at night. In this manual, we cover all the bases and provide helpful hints for manufacturing a product in China.
Here’s more reading material.
Why China?
You shouldn’t outsource manufacturing to China because there are factories on every continent.
The solution is elementary. Numerous opportunities exist in China that might not be available in your home country. Examples of these are:
Production Technologies
China is a technological powerhouse, with modern infrastructure and world-class manufacturing facilities.
As a result, most Chinese manufacturers have the resources and expertise to realize complicated product ideas.
Affordable Manufacturing Costs
In order to encourage the growth of China’s manufacturing sector, the government has instituted a number of pro-industry measures. As a result of their large size, most manufacturers take advantage of economies of scale to keep their operating expenses low and, in turn, give you competitive production pricing.
Manufacturing Capacity
Not all Chinese factories are huge complexes, but they tend to crank out a lot of product. The good news is that it’s easy to locate a manufacturer that can meet your volume requirements.
A Global Frontier
The country’s shipping infrastructure is very strong. In addition to the New Silk Road initiative, the China-Europe rail has established a connection to Europe. In addition, there are significant airports serving most major cities, making them accessible from all over the world.
Because of this, it’s a breeze to launch your product in other areas after having it made in China. The only things you’d have to do are get a sales license and figure out how to get the cargo to its destination.
How Much Does It Cost to Manufacture a Product in China?
The price of manufacturing different goods in China varies widely. In most circumstances, however, the cost of production in China is lower than in other regions.
Subsidies from the government, preferential taxation, and economies of scale all have a role in lowering manufacturing costs, as we discussed above. To this list, we can also add:
Automated production with technology often results in lower costs than traditional methods, especially when producing in large quantities.
Labor in China is relatively cheap when compared to other regions in the world. Manufacture relies heavily on labor, so having access to cheap labor is a major competitive advantage.
Raw resources can be obtained cheaply and conveniently from both domestic sources and neighboring Asian countries. Also, because of their massive volume, Chinese manufacturers may get their hands on these materials at extremely low costs.
Preparing on How to Manufacture a Product in China
If you want to work with Chinese manufacturers more easily, getting your paperwork in order can help a great deal. Therefore, try your best to:
Refine Your Product Concept
In many cases, the theoretical viability of a product concept does not automatically equate to its practicality in terms of manufacturing. Thus, before seeking manufacturers, be sure your product design has been thoroughly tested and evaluated.
Collaboration with a manufacturer or industry expert to create a prototype could be one approach. A prototype is useful because it allows you to see how an end product will look and work before investing time and money into production.
Research the Product Market
If you study the product market, you can learn how to make your product better and increase its chances of selling well. For example, you could look into:
In the market for your product, who are the main rivals?
When you know what they’re selling and how they’re selling it, you can enhance your own product.
When designing a product, it’s important to consider what problems it solves for customers and how those problems may be solved.
What are the item’s current market prices?
Investigate Manufacturing Trends in the Market
It’s safe to say that there is at least one significant manufacturing trend in just about every sector. As an illustration, several well-known clothing labels source their production from Asia because doing so reduces costs.
If you look into these tendencies, you may gain insight into whether China is the best place for your company to do manufacturing. Local production may be essential under exceptional circumstances, such as in countries with protectionist legislation.
How Do I Find a Manufacturer For My Product in China?
Once you’ve settled all your business details, you may go on to finding a trustworthy Chinese manufacturer to partner with. You’re in luck because there are many paths you can take to accomplish this objective. Take a look at a few examples.
Trade Shows
Annually, a plethora of trade exhibitions featuring Chinese manufacturers are held in both China and other countries. The Canton Fair is a good illustration of this because it attracts thousands of suppliers and manufacturers from literally every industry in China.
The great thing about these gatherings is that they gather hundreds of suppliers in each industry in one place. As a result, you’d be able to talk to various producers and examine various examples of their work to see which one best suits your needs.
To find the dates and locations of these markets, you might consult online trade fair guides. Once you’ve located a trade show or convention that’s convenient for you, check their website to see if any relevant companies will be exhibiting.
E-commerce Platforms
Marketplaces like Alibaba are designed to facilitate transactions between businesses and suppliers. As a result, you can conduct a search on these sites and compile a list of companies from which to contact potential manufacturers.
Spend some time learning more about the manufacturers who made the cut once you’ve narrowed your options down. It is wise to require manufacturers to show proof of registration because some middlemen pose as manufacturers to make a profit.
Work With a Trading Company
A trading company is a business that acts as an intermediary between you and the manufacturer. This business arranges for the production of your product at the factory, buys it after it is finished, and then sells it to you at a profit. In layman’s terms, they act as go-betweens.
A trade company’s connections and knowledge on where to source manufacturers are two advantages. Also, they could come in handy if you’re making a limited edition product or like to produce your goods in small numbers.
You would pay more than if you dealt with the producers directly, and you wouldn’t have much say over the production process.
Partner With a Sourcing Company
A sourcing firm acts as a go-between for your business and Chinese factories.
Suppose, for argument’s sake, that you intend to produce odor eliminators. You’d be:
Locate a reliable sourcing agent.
Specify the nature of the manufactured item you seek to produce.
Please describe any additional features or support options that would make this manufacturer ideal for your needs.
This would result in the sourcing agent’s doing the following in exchange:
Make contact with Chinese companies that make air fresheners.
Let’s have a conversation about your basic design and quantity needs.
Inquire about getting a quote for the aforementioned services
The sourcing agent would then report back with their findings after conducting the necessary research, allowing you to then choose a supplier.
The sourcing agent saves you a lot of time and effort by conducting the necessary investigation and consultations. The language barrier is eliminated, and a reliable sourcing agent can secure competitive pricing on your behalf.
These sourcing services do come with a cost, and locating a trustworthy sourcing agent can be difficult.
Consult the China Chamber of Commerce
There is a Chamber of Commerce in almost every country. Organizations like these exist to facilitate business between nations.
The China Chamber of Commerce is a great resource for finding manufacturers in specific industries, and you should definitely get in touch with them.
Information obtained from a Chamber of Commerce has typically been checked and comes from legitimate government channels. Consequently, it can be used as a verification method for any manufacturer, not just those suggested or supplied through traditional channels.
Factors to Consider When Negotiating with Your Manufacturer in China
Establishing a productive partnership with a product maker requires settling on a set of ground rules for conducting business together. The most foolproof way to handle this situation is to negotiate a contract that all sides agree to.
The Chinese Manufacturing Process and Contract Negotiation
Among the things you could bargain for and lobby for are:
The manufacturers themselves set the pricing they can charge, so you know you’re getting a good deal. Profit from this situation by negotiating reasonable production rates. Take advantage of the fact that you know this is the start of a lasting friendship.
What are the terms of payment, and how often will you pay the manufacturer? Pricing strategies such as per-order and quarterly installments should be thought about. If you’re short on cash, don’t be afraid to ask for help.
When it comes to how you’ll be paying for things, pick a system that works well for both your company and the manufacturer. Non-Chinese business owners should be aware of the currency conversion while making decisions.
The lead time is the time it takes to process and deliver an order of goods. The Chinese New Year holiday causes havoc in Chinese factories, therefore it’s important to try and find a solution before then.
The manufacturer you choose should employ raw materials that are compatible with your product’s design and formula. They must also provide you with some form of assurance that the materials were obtained in a moral manner.
What Are the Disadvantages of Manufacturing in China?
Challenges you may face throughout production in China would be missing from this guide if they weren’t included. Okay, so let’s get to that. Listed below are some potential issues that you should keep an eye out for.
Intellectual Property Theft
To put it another way, a great product concept is priceless. Therefore, if you disclose it, it will be easy for some sourcing agents, trade businesses, and even manufacturers to use it to their advantage.
They may have already cornered the market by the time you bring your product to market if that occurs. Therefore, it is important to equip yourself with intellectual property protection resources. Examples of these are:
NDAs are legal contracts that state one party will not disclose the other’s product idea to third parties in any form, including verbally, in writing, or through physical models or prototypes.
A standard NDA would not be adequate in China because of the way intellectual property legislation is set up there. Their “NNN” is an alternative document. The principles of “Non-Use,” “Non-Disclosure,” and “Non-Circumvention” provide you with protection for your intellectual property.
Trademark registration offers legal protection against others’ potential appropriation of your brand’s identity.
Patent registration can prevent your manufacturing partners and even your competitors from copying your formulation or design if you are launching a novel product to the market.
Quality Control
In many Chinese factories, quantity and efficiency are valued more highly than quality. That’s why it’s so challenging to track down a provider who consistently meets or exceeds industry benchmarks for quality.
Customer Prejudice
One widely held belief is that anything made in China is of poor quality and sold at bargain basement prices. Some consumers refuse to buy products from companies that do business in China due to ethical concerns, such as the country’s questionable treatment of its workers or the negative effects of their outsourcing on the local economy.
It may be challenging to persuade such clients to acquire your brand’s items.
Supply Chain Delays
The 2009 Covidae virus pandemic shows that events in China can have far-reaching consequences. Holidays and other celebrations can also have a significant impact on your supply chain.
You should think about coming up with a backup plan in case something like this happens.
Language Barrier
Mandarin Chinese is spoken all over China. It’s the de facto business language because everyone in the country uses it.
There is a high risk of crucial details being lost in translation if you cannot read or speak Mandarin. It also hinders communication and negotiation with producers.
Tips on Choosing a Suitable Manufacturer For Your Product in China
Start by narrowing your options for manufacturers down to just a few. Once that’s done, you can contact or visit them to learn more about their services and decide which ones are a good fit.
Below are some of the most fundamental criteria to consider as you evaluate Chinese manufacturers for your product.
Affordability
The manufacturing price tag is directly proportional to the product’s total cost of production.
You can figure out your selling price for a product by adding the manufacturer’s quoted price to a markup percentage. Now, let’s see how these costs stack up against the market rate you found while doing research.
If a manufacturer can provide you with a reasonable price that allows for high-quality production and a competitive selling price, you should consider working with them.
Services Offered
Do you have any pressing production requirements? Do you need packaging, in addition to production? Do you plan on using drop shipping? What about storage facilities or JIT shipping? You should compile a list of requirements like these and take note of the suppliers who can provide them.
Have some foresight. It’s not out of the question, for instance, to branch out into the cosmetics industry after getting some experience making skin care goods. You should thus seek out a manufacturer that allows you room to expand as a business.
Quality
A’made in China’ label has always been seen as a synonym for low-quality goods. It’s a common misconception, though, that everything that comes out of China is of low quality. Which manufacturer you go with is the deciding factor.
Give your business’s attention to producers who use rigorous quality control measures. Inquire further about the procedures they employ to assess your performance. What you need to know will be made clear by the reactions or displays you get.
Samples of their work can be requested for a more thorough quality assessment. Though you may have to pay for the samples from some factories, it could be well worth it.
Minimum Order Quantity
Do you remember talking about economies of scale? Factories are able to meet them by setting mandatory minimum order sizes. To explain, here’s how it goes down.
The production cost per unit of a good or service in manufacturing often decreases with increasing order quantity. This is because price breaks are available when purchasing raw materials in large quantities.
Further, compared to processing numerous smaller batches throughout multiple cycles, processing one large batch of items uses fewer resources.
Therefore, a manufacturer’s minimum order quantity is often the smallest number of a product they can create while still making a profit.
Determine how many of the goods you plan to produce initially. It’s also important to think about whether or not that number will change over time. You can use this data as a guide to determine if a given manufacturer has a manageable minimum order quantity.
Manufacturers may be slightly flexible with their MOQs in order to meet your needs.
Shipping
Even though shipping isn’t directly involved in making the product, you’ll still need to work out the details with your manufacturer.
Keep an eye out for suppliers who deliver to your target market directly or who can help you coordinate delivery with reliable logistics partners.
Certification
A reliable producer will be registered with the appropriate authorities and can provideInstructions for Manufacturing in China? you with the relevant information to verify this. Avoiding the time and effort to confirm this information could save you from potential legal trouble down the road, but it could also damage your brand.
Final Thoughts
Having your own label put on goods made in China is an interesting and potentially profitable idea. To succeed in China’s manufacturing sector, all you need is an appreciation of its dynamics.
