Outsourcing your Manufacturing to China.

The main reason for outsourcing manufacturing to China are the low labour costs which allow components/products to be manufactured competatively. Many companies, world wide, manufacture goods competatively in China and other low cost areas. Below, are some of the things to consider when outsouring:

1. Ensure that your product can be manufactured easily and it is essential that a cost reduction exercise is carried out to investigate improvements for manufacture.
2. Re-assess the strategies of your Company to ensure the benefits of outsourcing and offshore manufacturing achieve the goals your company requires.
3. Research your prospective Outsourcing requirement and process.
4. Costs which need to be considered, and are normally overlooked, are the costs for Project Managements and Travel. Doing outsourcing yourself, may eventually cost your savings generated in your manufacture.
5. Use a recognised outsourcing company like SOURCE-IN-ASIA TODAY LIMITED to generate prospective suppliers in China to carry out your work.
6. Ensure, that through your Outsourcing Company, dedicated lines of communication are available, especially in English.
7. Give as much information relating to the product, including any previously encountered difficulties and concerns, as these need to be included in the setting up of the product, to maintain a like for like situation. REMEMBER, you cannot expect the product to be improved by outsourcing.
8. Using a UK outsourcing company will allow you pass all the required information to the Chinese supplier, as the company should visit the supplier to discuss the project and go through the requirements face to face, as SOURCE-IN-ASIA TODAY LIMITED would do.
9. Get your outsourcing company to give you as much information as possible on the supplier who will be carrying out your manufacturing. Information to obtain are items like a process audit for your product, Company Information, Accreditations for Quality Requirements.
10. Before placing large orders, place a sample order, obtaining as much manufacturing information as possible. This will allow you to go through the sample batch in detail and understand the quality and whether they meet your expectations of the product. This will also allow you to carry out possible changes prior to volume production.
11. Make sure that your outsourcing sourcing company is using suppliers which conform to the Environmental/Ethical policy for companies in China.
12. Transportation is also a cost which needs to be taken into account when outsourcing, as again, these costs can be large. Using an outsourcing company will ensure that the goods are transported by a reputable company, at the most economical solution, air freight or sea freight. All costs should include door to door carriage, insurance, duties and taxes.

For further information please visit SOURCE-IN-ASIA TODAY LIMITED website www.source-in-asiatoday.co.uk or contact lynnjones@source-in-asiatoday.co.uk

Doing Business in China.

FLEXIBILITY.

China has become the place to outsource to over the last decade, and a large amount of companies have already done this, but there are still risks in doing so. In the present climate, suppliers have gone out of business, and this creates large disruptions for the customer when it occurs. It is therefore important that customers remain flexible and multi-source their components or goods.

SUPPLIER NETWORKS.

It is important that customers utilise established UK companies to source and set up production with supplier networks in China, to achieve the cost savings that customers seek. By using established UK companies, relationships with the Chinese suppliers are already in place, especially in terms of honesty and integrity, and therefore a large part of the risk of "going on your own" strategy is removed.

ARE LOWEST COSTS BEST?

When sourcing in China, customers must look at whether they wish to go down the "lowest cost route" or down "a low cost route". The "lowest cost route" normally gives risk as suppliers are in the lower quality bracket, cutting corners, poor facilities, facilities which the customer would not use back in the UK and you get what you pay for. If the customer wishes to go down this route, then China may not be the offshore country he should be using. The better option is the "lowest cost route" where suppliers are of a standard which ensures that suppliers have quality accreditation's, that they follow a QMS system, operate to audited procedures, and have facilities which the customer would feel was there own company. The costs will not be the cheapest, but over time, as relationships build, there will opportunities to achieve cost downs on goods.

SUPPLIER LOCATIONS.

Part of the selection of a supplier must be the location of the facilities, as things like a proper infrastructure, allowing goods to be quickly moved from the factory to the port, Government incentives to used companies in special development location, good transport locations with major motorway facilities, ease of entering and exiting China on business trips. In addition, there certain cities which are noted for manufacturing a certain type of product, which means it will difficult to achieve competitiveness elsewhere in China.

CULTURAL DIFFERENCES.

Cultural differences are the most important changes from the west. When doing business with Chinese suppliers, you will find that discussing technical points, it will involve the full team, and discusions on a single point will take time, something the west are not used to. One of the other main points is the breaking off for lunch which will take 11/2 - 2 hours, again something the west are not prepared for. Be polite, as to be abrupt may send the wrong message. Also remember, a large amount of discussion and work is carried on during the evening meal, so also be prepared for this.

I hope that this small insight into doing business in China has been helpful, and should you require any further information, please contact Source-in-Asia Today Limited, who will be only too pleased to help or discuss any points you have.