Have an idea for a product but don't know how or where to produce it? Consider manufacturing in China, often referred to as the 'world's factory'.
Contract manufacturing in China
Contract manufacturing in China is simply making a selected product to a different standard to what a factory in China usually offers. Typically, changes are made to the product or it is created from scratch.
Contract manufacturing is an option for you if you just want to personalise the finished product to your own guidelines, as well as if you want to create something completely from scratch.
Why outsource manufacturing in China?
Over the past few decades, China has become a manufacturing powerhouse. Whether we want it or not, most of the products we buy in shops have been manufactured in China.
There are several reasons why so many companies choose to outsource the production of their goods to Chinese factories. First of all, manufacturing in China is cheap - Asian countries are known for their very competitive production costs. The Chinese have invested heavily in the development of their manufacturing infrastructure, they are also a world leader in exports and have a huge internal market.
In addition to this, China is also developing very rapidly as a technology centre - it is able to meet even very difficult production requirements, both in terms of pure technology and labour skills.
OEM and ODM - what is it?
Cooperation with Chinese factories is most often an OEM (Original Equipment Manufacturer) model, where the customer orders finished products, but bearing their own logo.
The ODM model (Original Design Manufacturer), on the other hand, is slightly different: in addition to their own logo, the customer has a say in the design of the entire product.
What goods are produced in factories in China
In Chinese factories, you will find virtually all types of products. The most popular export goods in China are still:
electronic devices: smartphones, computer parts, small household appliances,
machinery and vehicle parts,
clothing and footwear,
toys,
animal accessories
medical equipment.
Advantages and disadvantages of contract manufacturing in China
Contract manufacturing in Chinese factories obviously has its advantages and disadvantages.
Among the advantages, one cannot fail to mention the many years of experience and the excellent organisation of the entire production process in China. Asian factories also have a much higher production capacity - they are able to produce more and in a much shorter time than their European counterparts.
It is also necessary to mention the low production costs, as well as the wide selection of factories - there are almost 3 million of them in China!
Unfortunately, there are also downsides - lack of full control over the manufactured goods, language barrier, high MOQ, i.e. minimum order quantity, which is required in very many Chinese factories. Be sure to ask about the MOQ before you place an order for the production of goods - very often the minimum order size is quite high, as it is simply not profitable to produce a smaller quantity of goods to the customer's order. However, it is worth mentioning here that usually the larger the order, the lower the unit cost will be.
What can you do to make sure that your outsourced production goes off without a hitch?
Before you decide to outsource the production of your goods to a Chinese factory, it is important to remember that fraud happens - most often the middleman claims to be the manufacturer. Therefore, it is best to use appropriate safeguards such as:
contract,
verification of the factory and the manufacturer,
inspection of goods at all stages of production,
ordering samples of the goods so that you can assess their quality and compliance yourself.
The production of goods in Chinese factories is not something you should be afraid of - most of the goods you find in shops have been produced in Asia. If you have doubts about the quality of the products - remember that more and more companies from all over the world are moving production to China, and these are often very well-known brands that would not risk producing goods of questionable quality.
Cooperation with Chinese factories is still a very attractive option for many European companies. The key here is to carefully analyse the market and potential risks, control the quality of the goods ordered and build relationships with Chinese suppliers.
