Contract Manufacturing in China

Has the coronavirus pandemic made it overly difficult for you to maintain your manufacturing activities? Is there a risk of bankruptcy and business closure because of massive overheads?

There is a way to save your company from such a terrible future: by offloading and outsourcing some of the production activities. Contract manufacturing is one of the most feasible manufacturing techniques available to companies today.

Why choose a Chinese manufacturer for contract manufacturing?

China is distinguished around the world for being one of the most amicable manufacturing hubs in the world. It is also one of the most cost-efficient and price-friendly countries in the world.

Chinese produced products cost 5% less than those made in the United States and a whopping 10%-20% less than those manufactured or assembled in Europe. The reason for such low prices is simple. For one, labor costs in China are significantly lower than in Western countries. An average wage comparison shows that for every USD 35.96 per hour wage in the US, Chinese workers are paid USD 11.90.

The second reason is taxation. Many countries, like the USA, don’t add the Value Added Tax (VAT) on imports (which is something that countries like China do). The absence of the VAT reduces your import expenses tremendously. This makes any products imported from China infinitely more budget-friendly.

Finally, China’s lower-value and very stable currency (compared to the USD and many European currencies) essentially gives you the added advantage of purchasing manufactured goods at a significantly lower price.

By choosing to outsource your manufacturing activities to a contract manufacturer in China, you can save a huge portion of your expenses on production which in turn allows you to spend it instead on marketing, transport and product development.

Tips to select the perfect contract manufacturer from China

Identify your production needs

You might be choosing contract manufacturing for a number of reasons, with high production overheads being just one of them. Contract manufacturing is also a great option when:

You want to produce better-quality products and don’t have the resources for it.You don’t have the knowledge and expertise to produce the product you want to manufacture.You need more time and flexibility to focus on other areas of your business.You want to scale at a very fast pace and reduce product time-to-market.You want to simplify your supply chain and make your business easier to manage.

These are your customized manufacturing needs. You should use them to determine what type of contract manufacturing partner you want to work with and what type of agreement you want to set-up.

Search for contract manufacturers who meet your manufacturing requirements

Once you know what type of contract manufacturing partner you’re looking for, it’s time to get your search started.

Instead of just doing a Google search and landing on a random manufacturer, use supplier/manufacturing China sourcing agent. These sourcing specialists have extensive experience vetting and matching companies with their ideal contract manufacturers from China. They use a very thorough screening process that covers a wide range of aspects; from manufacturing history, to legal adherence and regional reputation. Every Chinese contract manufacturer recommended to you is filtered based on your production needs and budget. A solid China sourcing agent regularly updates their supplier/manufacturer list by meeting, evaluating and onboarding reputable companies. This way, you have a long stream of premium-quality potential partners to choose from.

When you work with a China sourcing agent as your Chinese contract manufacturing partner, you eliminate a large part of the risk that comes with choosing an unknown overseas factor.