Wondering whether or not you should get your product manufactured in China?
There are so many entrepreneurs looking to China for their manufacturing needs.
At the same time, there are tons of horror stories. People who have gotten low-quality products or orders that don’t meet their specifications.
I want to shed a light on some of the pros and cons of manufacturing in China. Specifically, I’ll be talking to those looking to launch a Kickstarter or Indiegogo campaign. However, these tips also apply to other ecommerce entrepreneurs.
If you don’t wanna do it yourself, you can also check out my list of companies that will help you get your product manufactured in China.
Pros of Chinese Manufacturing
Let’s get into some of the benefits of outsourcing your product manufacturing to China. Keep in mind that these are gonna vary depending on the type of product you have, your order size, and where in the world you live.
1. Lower Labor Costs
This most obvious benefit of manufacturing in China is that you’re going to get a much lower labor cost than in your home country. It depends on how labor intensive your product is, but the simple wage difference can have a dramatic effect.
The other great thing is that you don’t have to provide any training to new employees. By outsourcing your production to a factory, you’re letting them take over all of that. They already have skilled workers there.
Whenever you reduce costs and keep your volume output the same, that means your profit margin goes up. You have more cash to do things like advertise, re-invest in new products, hire employees, or take home to the bank.
2. Product Familiarity
Another huge benefit of outsourcing to China is that you’re going to take advantage of their depth of knowledge when it comes to manufacturing in general.
Every factory over there has experience creating and assembling many different types of products. They may have already made a product that is very similar to yours and they can draw on that knowledge.
If you’re doing the manufacturing yourself or trying to get someone nearby to do it, there is less of a chance that they are familiar with the type of product. They probably have never made one before. There is a learning curve, where things could go round.
3. Scaling Capabilities – High Output
Arguably, one of the best parts about Chinese manufacturing is that’s easy to ramp up the production of your product. As you grow the demand for your product, you can start to scale – quickly!
I’m talking about:
- Fast turnaround
- Aggressive production schedules
- High volume quantities
Not every factory or area of the world is capable of doing this. You need a partner that can grow with your business.
4. Online Websites Like Alibaba
More and more, websites and directories have popped up to help you find manufactures in other countries, like China.
One simple example is Alibaba. You can go on there, discover manufacturers, connect with them, and even see information on things like minimum order quantities, cost per unit, and some valuable information about the company listed.
Some sites include:
5. Marketplace Expansion
The cool thing about having your manufacturing in China or any other area around the world is that you can more easily expand into new markets.
Think about it… if you have your inventory in China, and you’re looking to expand, you can easily begin to sell to Chinese markets (which are also booming).
You don’t have to pay high shipping costs to get your products there. They are already there, waiting to be sold. It’s a no brainer.
6. Reproduction Capabilities
Lastly, I can’t comment on this, but technically one pro of outsourcing to China is that they have pretty good reproduction and reverse-engineering capabilities. They can make products that are already out there on the market.
I don’t like the idea of copying other people’s products, but if that’s something you want to do or a way in which you want to gain inspiration for your own, then you could consider China for that reason.
Cons of Chinese Manufacturing
At the same time, there are real drawbacks to using a manufacturer in China. Let’s go through some of them so that you can avoid costly mistakes in your ecommerce business.
1. Finding a Good Manufacturer
Manufacturers in China are old school. It’s hard to find a reliable one online, especially when sometimes you might be dealing with a middle man when buying through a site like Alibaba.
I recommend looking into a company like Morpho Manufacturing, who have feet on the ground in China and can help you find the right factory to make your product.
It will make things a heck of a lot easier. You don’t have to spend hours and hours searching around yourself, calling companies, and trying to sort out the good ones from the bad ones.
2. Quality Control
Quality control is also an issue when it comes to manufacturing in China. You’re not over there, so how can you know whether or not the products are being made correctly and that they are of high quality?
You’ll only know once you get an entire shipment, and by then it will be too late. You can use a company like one of these to help with quality control, or you could fly over to China and inspect the process personally.
3. Language Barrier
Unfortunately, there is a pretty big language barrier. That makes it hard to deal with people on the other end of the phone, who might not fully understand what you’re trying to say.
Or, worse, they say they understand, but when it comes to actually making the product, they don’t hit all of your specifications. The language barrier is real. It helps if you have someone on your team who speaks the native tongue.
4. Shipping Costs
While having your products in China can help give you access to global markets, it also means that you’re going to need to pay some hefty shipping costs to get them into the United States or shipped around the world to your Kickstarter or Indiegogo backers.
You’re going to have a longer lead time than if you got the product made down the block. You have to send the products over the ocean or by air to you. You don’t want your inventory to get delayed in-transit.
5. Minimum Order Quantities
Because the cost of labor is so cheap in China and there are expensive machines involved, they require big orders to make their factory business profitable. This means that you’re going to have a high minimum order quantity for your initial production run.
This is one of the reasons that websites like Kickstarter and Indiegogo have become so popular as a way to finance the initial batch of orders for your new product.
6. Copyright and IP
The fact that China can easily reproduce products means that your IP is at risk. If you’re not careful, you can have your product ripped off by another person there or someone who wants to make a quick buck.
There are a few ways that you can prevent your IP from being stolen. Unfortunately, none of them are sure things. Even having a patent isn’t a sure thing, because enforcing that patent can be difficult.
7. Global Events
Lastly, you are at the mercy of global events. If there is some natural disaster in China or political occurrence that affects business, then it will also affect the lead times for your inventory.
This is a reality of doing business internationally. You can’t really get around it. It’s something you have to be aware of and a risk that you have to accept if you want to outsource your manufacturing to another country.
