Advantages and Challenges of China Manufacturing
China sourcing is increasingly seen by companies from around the world as a way to strategically position themselves against competition and to meet growth aspirations. Having a Chinese hub provides leverage in the surrounding markets by making them more easily accessible with products that are more cost competitive.
However, the country is continuously shifting in a variety of areas that make doing business in China both advantageous and challenging. Although the central government is making it easier for companies to establish branches and population shifts from rural to urban living are adding to the workforce, other factors such as labor shortages, wage increases, and increasingly high turnover must all be considered.
It takes a keen eye and better preparatory management planning to avoid experiencing additional costs that can eat away profits which might have been gained by relocating your company to China. Following are some of the advantages and challenges manufacturers might consider that may help with making decisions for a China manufacturing move.
There are numerous advantages for considering a business move to this part of the world. Large corporations with extensive capital can absorb certain expenses associated with such a move, but it is essential for small to medium-sized businesses to more closely weigh the advantages against the disadvantages.
Doing business in China offers advantages like increasing international competitiveness due to various criteria. First of all, wages and operating costs are still considerably lower than in other countries. Savings of between 30 to 80 percent can be realized depending on the amount of labor required to manufacture products.
There is also a growing list of incentives offered by Chinese agencies for utilizing China sourcing. Add these points to a domestic market that is booming, the eagerness of Chinese workers, and having ready access to improving logistics and internal personal and technological research and development and you have very good reasons to manufacture China products here.
Even though this huge country offers some very attractive advantages, it also presents some challenges that have existed all along or are popping up as things progress.
Language is a constant challenge to proper understanding and it can take extended periods to successfully get things started. Cultural differences present another standing problem due to some very different ways of doing and seeing business approaches. A good example lies in product quality which is often viewed in this part of the world as being something that can be sacrificed for higher quantity. This issue can lead to brand risk as customers who buy from China and receive poor quality products may go elsewhere. It is advisable to have a quality control unit on-site.
On the one hand, a Chinese location provides a hub in close proximity to other Asian markets, but it also presents challenges in areas such as long supply chains and distance from other lucrative markets. Distance from the home office also presents a challenge with sufficient lead times for relocating key personnel.
If you require assistance with China sourcing and can benefit from tips, advice and information stemming from years of experience in the Chinese markets, contact Asiatic Sourcing today.