Outsourcing to China – Top 7 Things to Consider

Price to manufacture

Outsourcing to China is a topic that usually ends as one of the major discussion points between the purchaser and supplier. To avoid unexpected surprises or costs, one must bear in mind that price almost always impacts quality. This is often a consequence of small (MOQ) Minimum Order Quantities which often forces suppliers to avoid putting in the extra work that is needed to coordinate with sub suppliers and/or raw material suppliers to fix manufacturing issues, which one must always be cognizant of. The reality is that most factory managers tend to give more attention to larger orders for obvious reasons. Pushing the costs down often increase risk of on time delivery and quality assurance.

Quantity

The right order quantity can often drive your costs down and the quality up. This is because larger orders tend to give you more influence and control at a factory level. Factories are rarely totally independent and often rely on other people and services in the supply chain that often influence the focus of a factory. So smaller quantities can almost never really give you the necessary attention to both reduce costs as well as improve quality.

Take for example a forged brass door lock. The handle may be forged brass so a 5,000 piece MOQ is acceptable. But the locks also contain among other things, a small spring. The spring manufacturer makes these with a MOQ of 50,000 pieces due to their small size and he in turn has to adhere to his raw material suppliers MOQ and so on. So in this instance if you are outsourcing to China and want to buy just 200 spare springs you might have problems. If however these are off the shelf springs then you may be ok, but if you want a brand new design then you would be up against this 50,000 pieces MOQ.

Lead Time

Transporting goods across the globe is for certain going to take a significant amount of time and the cheapest way to ensure that your products arrive on time is by good purchase planning and project foresight. Don’t get taken in easily by those that offer magical solutions when it comes to lead times. Often they are motivated by roping you in because of your desperation and the urgency to get your product shipped and in the end still not delivering according to plan.

Complexity

Costs for parts that are mainly machined or that have less manual labor involved are often less competitive in Asia. More complex parts will require higher level manufacturing controls, this is available in China but depending on the part you may pay close to western prices for it in some cases. Regardless if it is complex die cast parts or packaging for premium skincare products, you need to take product complexity into account.

Suitability

Do you have a market ALREADY in place for your product? We often get asked to produce prototypes and very small sample runs on projects that are still in their infancy. These projects consume a lot of time and cost a lot of money with no clear end in sight. Usually endless modifications are needed to tooling and this generally results in delays and additional expense. Experience tells us that factory owners tend to be quite short sighted and this type of ‘development’ project can often result in supplier burn-out, where he or she is no longer motivated to carry out endless tool modifications, tweaks and small and costly sample runs. It’s not unusual to come up against a boss wanting to see ‘some evidence’ of future orders in order to stay interested in your business. You can begin by searching for suppliers on sites like Alibaba.com or Made in China.

Culture and Communication

When outsourcing to China it’s often useful to remember that ‘understanding what was said’ is not the same as ‘understanding what was MEANT!‘. Just because an engineer answers you in a positive way doesn’t necessarily mean he knows what you expect or that his assumptions of a ‘smooth surface finish’ lines up with yours. That’s not to say he doesn’t mean well or that he wants to deceive you but we see this time and time again where people are misled by the answers they receive back from a factory, and very often it’s purely a communication problem.

When one of my American or European colleagues asks me “can you do this?” I interpret that to mean “can you do this PROPERLY or at least to a standard that you and I would both consider to be pretty good”, and I can make this ‘pretty good’ assumption because we are from the same cultural background. However if you are not from the same cultural background then many of these assumptions will be useless and at very least misaligned.

Outsourcing to China Perspective

When viewed with the correct perspective it is possible to purchase and produce parts in China. It’s not some terrible minefield and it’s not totally fraught with danger once you are aware of the differences. I have spent many years living and working here so I see both sides. You can take a moment to recalibrate your expectations and just become aware of the social, cultural and linguistic differences and enjoy the experience, or you can just remain rooted in doing things the ‘western way,’ (which often translates to ‘point and shout’)  and be in for the ride of your life!

Sourcing Allies is a team of expert China sourcing agents that has helped western customers manufacture and source products from low-cost regions since 2006.

For more on China sourcing visit our website or write to us at info@sourcingallies.com.