Contract Manufacturing
Contract Manufacturing in China: 5 Ways To Mitigate Costs
For the past decades, manufacturing in China was a rather inexpensive process. Many overseas companies have outsourced their production to China.
But now, China has hiked up their production costs because of major and minor changes in its policies and regulations.
Overseas businesses should keep costs low to remain competitive in the market. That’s why we’ve collected this list of five ways for you to reduce your costs by using contract manufacturing in China. Let’s get started!
Costs Are Rising, But…
Despite these headwinds of rising costs, China’s manufacturing future remains bright and you shouldn’t miss out on the benefits.
While the country is losing its edge in some labor-intensive sectors, it is gaining strength by building more modern infrastructures and hiring more talents at home and abroad.
A quick look around Shenzhen tells you this is a different type of China. It’s a place that doesn’t need to be cheaper than anywhere else because it’s better than anywhere else. In this factory city, no one is thinking about cutting corners and doing things cheaply to compete with other countries. Instead, everyone is thinking about how to innovate and be more productive than any other country in the world.
Manufacturing costs may be higher, but you can get better quality products and customized services and support. In this regard, you can save your company a lot of money, time, and hassle.
Conduct A Manufacturing Cost Estimation
There are many things that you should be aware of before outsourcing manufacturing operations in China, conducting A manufacturing cost estimation is the main one.
As you know, overspending and underspending can lead to confusion, lower confidence, and many other negative outcomes. The right manufacturing cost estimation is essential to optimizing the manufacturing process and building value-driven product, which is capable of competing in the global market.
So it’s particularly important to figure out manufacturing costs associated with raw materials, product units, quality control inspection and shipment.
Use Design From The Contract Manufacturer
When it comes to industrial design, you will probably have a hard time.
As you may not be a design expert and you have no idea how to use CAD and build a prototype, and more importantly, you can’t start learning design from the scratch. You know your product design needs to be done by someone who has the skill set required for this task. So, you may want to hire an in-house designer to achieve a better appearance result. However, it may not be economically viable for small-business owners.
To cut costs, many businessmen would look for freelancers to help with their product design. But the problem is how to guarantee the result when your project is complex. You will end up in endless chats and files without getting things done.
You can count on your contract company which has a team of engineers and industrial designers working together for a certain project. They will work closely with you to create a well-designed prototype that can be used as a final product or can be modified to suit other requirements.
And the cost of product design is negligible comparing the production costs, estimated at around 5% of total expenses in your project.
Substitute Raw Materials
Don’t make the mistake of relying on the same raw materials for your products throughout the business’ life cycle.
That’s because raw materials are influenced by many factors that change over time, which can significantly impact your total costs and production deadline.
As a business grows, you need to consider producing the same or similar product with alternative raw materials, which are more economically sustainable for your business.
For instance, consider ways you may be able to recycle materials into new products or use less expensive substitute materials. These small changes can drastically help you reduce manufacturing costs.
However, this could be risky if you don’t plan and make the appropriate changes. So, make sure you know what materials are best suited for your product so that your goods are always meeting industry standards and customer expectations.
Conduct Quality Inspection
Maybe you’ve read a few stories about how an overseas business has reduced its costs by cutting down on quality inspection.
However, it’s not a good idea especially when you are running a big business and want to hold the company in long term. Using quality control offers you peace of mind.
That’s because when customers receive your product which is of low quality and defective, they will complain online and never come back to you again. You will lose your reputation and profits.
If you want to reduce costs but still need to check if your product meets your expectations, you can work with a third-party quality inspection company.
By hiring an experienced quality inspector to conduct regular checks throughout production, you can be sure that your products are safe for consumption.
Get Started with Contract Manufacturing Today
Using contract manufacturing in China is a smart move for your company, which helps to save costs and time. So you can focus on expanding your business.
When your company needs contract manufacturing services, come to Shield Works. Our experienced team helps to keep your project moving smoothly and efficiently. With our British management background and long-term manufacturing experience, we are so sure of our proven process and expertise we take the responsibility of protecting you from all manufacturing defects. Contact us to diss your project today!
The Power of Contract Manufacturing: How It Can Drive Down Costs and Increase Flexibility
The contract manufacturing industry is thriving globally due to its ability to drive the immense reduction in the cost of manufacturing goods and to grant companies increased flexibility faster than traditional methods.
In this article, we’ll take you through the primary reasons why contract manufacturing can deliver improved cost performance and production flexibility.
Reduce Labor Costs
Labor cost is a key element in the manufacturing industry. Typically, the labor is more expensive when you are from the developed world. So it makes more sense to outsource your production to China.
Depending on how far along you are in manufacturing your product, you may be paying upwards of 50-70% for labor costs.
When shifting to contract manufacturing, it’s typical to see those costs reduce by 30-50%. While lower costs aren’t guaranteed, there’s plenty of room for negotiation based on your volume requirements.
In some cases, companies have been able to negotiate down as much as 80% of their original labor costs. This is a massive saving that can help you create a more profitable business model from day one.
Reduced Capital Requirements
If you’re not ready to invest in building an in-house engineering team and buying expensive equipment, contract manufacturing is the best option to help you get a product to market with minimal risk.
You simply pay for services as needed rather than extra investment, otherwise, that will be a waste of having a facility with equipment that sits idle most of the time.
Some manufacturers may even let you use their machinery at fairly lower prices if you hold an order of larger quantities or have a good relationship with them.
Typically, a professional contract manufacturing company focuses more on improving efficiency. They have a pool of in-house specialized engineers because a company’s production efficiency obviously cannot be improved overnight.
Increase Inventory Flexibility
Since you are not tied to a specific factory, you can switch manufacturing plants at any time without having to change production plans. This gives you increased flexibility for where and when you buy raw materials as well as components needed for your product. In this case, you will never be stuck with too much or too little inventory if you have contract manufacturing.
Meanwhile, when you work with contract manufacturers, they handle all aspects of manufacturing including procurement and logistics.
The cost savings associated with using a third-party supplier is passed on to you in terms of lower prices. In addition, because these companies specialize in one aspect of manufacturing (such as PCB assembly), they do it better than anyone else in their field which means they can offer better quality products at competitive prices.
Increase Manufacturing Experience
If you choose a professional contract manufacturer who is specialized in what they do, you will be worry-free in many situations.
The most important one is that they usually have a customized plan for you to meet your needs in production, quality standards and lead time. It will be easier and more effective to get your project done.
The other excellent experience for you if you have a professional contract manufacturing firm is that they have one-stop supply chain services to deal with from sourcing, quality control, warehousing and shipping. With these services, you can save your time and money in finding other third-party companies for your business.
Manufacturing In China With Confidence
Contract manufacturing is only becoming more prevalent as time goes on. When your company needs contract manufacturing services, come to Shield Works. We take care of every aspect for you, so you can focus on innovation and launching products as quickly as possible.
With our well-established facility based in Zhuhai, Guangdong Province, we offer a range of services to accommodate your needs, from a one-time contract manufacturing and precision assembly to warehousing and fulfilment, without ever worrying about inventory or quality control. Our production process is streamlined, efficient, and optimized – so no matter what phase your business is in, we can take care of you.
We pride ourselves on excellent customer service and British background management experience. Contact us to find out how we can help with your project!
5 Qualities to Look for in a China Manufacturing Partner
Finding the right manufacturing partner can be tricky, especially if you’re new to China manufacturing or just starting out with your business.
There are plenty of quality manufacturers out there, but it’s important to make sure that they have these 5 qualities before you enter into an agreement with them.
Only then will you know you can trust them and put your business in their hands without having to worry about things getting messed up along the way.
1) Knowledge
When you partner with a manufacturer, they’ll act as your vendor or factory.
This can be intimidating when you’re not sure what questions to ask or how much to spend.
A good China manufacturing partner will have knowledge of both manufacturing and international business and can help determine which factory or vendor is right for your product.
It’s important that your manufacturing partner understands what your product is, where it comes from and how it’s made—otherwise, how can he/she help you?
Skilled manufacturing partners are invaluable when it comes to navigating things like quality assurance, intellectual property protection and shipping logistics; manufacturers with specific knowledge will know exactly what questions you should be asking.
2) Transparency
If you have questions, or something goes wrong with your order, it’s nice to know that your manufacturer is open and honest about what happened.
It’s no good if you don’t get your calls returned or emails responded to quickly and thoroughly.
If you need a manufacturer who will constantly track and ensure they are producing quality products, make sure you ask around and do research before settling on one.
Chinese business culture can be complex and difficult for outsiders to navigate.
If you plan on doing business in Asia at some point, it’s a good idea to find someone who knows their way around and won’t hide how they do business from you.
3) Language
Communication is key with your new manufacturer.
Be sure you speak the same language.
If there’s a language barrier, it will make working together much more difficult and might lead to frustrations on both sides.
Make sure you clearly understand what your manufacturer will do—and won’t do—for you before signing any contracts or paying any fees.
You should be able to get an idea of their working style just by talking on Skype or even emailing back and forth for several weeks. (If they get upset easily when dealing with customers, it might not be worth continuing.)
If communication doesn’t go well at first, consider ending your relationship early rather than suffering through something that could eventually lead to problems down the road.
If you need much more timely response, you can also use WeChat, an IM chat app most Chinese use.
4) Dependability
Many manufacturers offer low-cost goods and services.
Although it might be tempting to use one of these companies, it’s important that you remember that you are paying for more than just products.
Quality customer service can be lacking from low-cost companies; you’ll want to work with an manufacturer who makes you feel comfortable and is always willing to answer questions.
This can help build a relationship of trust between your company and your manufacturer, which will be beneficial throughout your business venture.
On top of that, having direct access to someone at your manufacturer’s facility will make communication easier as you enter into negotiations
5) Personal Relationship
You might think that saving some money is good enough of a reason to choose a manufacturer solely based on price, but keep in mind that it’s much easier and more enjoyable to work with someone you already know.
You’ll get more out of your partnership if you feel like there’s trust and camaraderie on both sides.
Plus, buying in bulk will allow you to negotiate better prices than if you were working alone.
Your personal relationship should be one that allows communication channels open at all times.
This can also be a reflection of his/her relationship with suppliers.
In China, especially when it comes to dealing with factories, maintaining guanxi(relationship) is extra important.
It can make direct impact on how your order will be made.
Shield Works has over 16 years of manufacturing experience in China. Feel free to let us know if interested!
The Benefits of Using a Contract Manufacturer
Manufacturing continues to grow throughout the years and has become incredibly profitable. Did you know that manufacturers contribute about $2.71 trillion each year?
If you’re thinking about using a contract manufacturer, you might wonder if it’s worth it. There are several benefits to using one, and some might surprise you! Read this guide on the various benefits of using a contract manufacturer today.
Keep Costs Low
Contract manufacturing is a great way to reduce the cost of your services and products. This is because there’s a lower chance of errors. You can also benefit from bulk purchasing and skilled labor.
All of this can lead to satisfied customers since you can lower the cost of goods. Manufacturing businesses specialize in high-volume production lines and cutting costs.
This means that you can focus on running your business instead of worrying about production or making errors. Many companies are experts in their field and what they sell, but they struggle with the production process. That’s where a contract manufacturer comes in.
Save Money
Did you know that manufacturing accounts for 12% of the U.S. economy? You’ll be able to save money since you won’t have to worry about buying equipment for production. Skilled laborers will already have the equipment that you need.
If a product is high in demand, a manufacturer can focus on decreasing the time that it’ll take.
Test Products
You can test products before they’re in the hands of your customers. This is a great way to save money by not producing a defective design.
Determine what the needs of your business are since each manufacturing company could offer different services. They can also make changes to the product as necessary.
They can improve the products, increase the production rate, and give you great profit margins.
Professionalism
Product manufacturing companies will provide you with products without errors. This will help the reputation of your company.
Some companies will try to do production on their own and then make a grave error. Let a manufacturer perform production and watch your production rates increase.
They can also bring fresh, new ideas to your products. Manufacturers are experts in design and can help your product shine.
Improved Efficiency
Many manufacturers learn how to reduce waste. They can perform various tasks such as painting, machining, difficult assembly, welding, etc. This can help reduce the manufacturing costs for your company.
Manufacturing companies can also provide you with more flexibility. Whether you’re looking to scale production, develop products at the same time, etc.
You can start and schedule projects when it makes the most sense for your business. You’ll also know that they’re using the top-of-the-line equipment in the company to provide you with high-quality products.
Save Resources
Since they’re knowledgeable about reducing waste, you can lessen your carbon footprint. This also means fewer costs for you.
Your staff will have more time to work on business tasks. You can focus on your business, marketing, etc.
If you wanted to do production yourself, you’d need to hire a large staff. This could include operators, engineers, managers, etc.
Whereas contract manufacturers already have their staff in place. You’ll have a large team working on your products without having to worry about shifts, payroll, or hiring workers.
Sell Your Products Sooner
Since managers can create your products fast, you can get your products out there to the consumers quicker. There are different methods such as CNC machining and Rapid prototyping that can help speed up the process.
You might be able to get your products out there in a few weeks!
Various Options
They can handle various aspects of the manufacturing process. These can include material purchases, product design for manufacturing, assembly, packaging, etc.
Since everything is happening under one roof, it reduces costs for you. They’ll handle the difficult parts of the manufacturing process so you as a business owner can have less stress.
Deadlines and Estimates
You’ll know in advance how much to budget for the process. They’ll provide you with a detailed estimate before they begin.
This will make it less likely that you’ll experience delays or unexpected costs. They’ll also be able to tell you how long it should take.
Improved Communication
If you try to have the product manufacturing process internally, you’ll need to contact multiple vendors at all times. Through contract manufacturing, you’ll be able to stay in communication with them. You won’t have to worry about a response.
Who Can Benefit From Manufacturing Contract Companies?
Most businesses can benefit from contract manufacturers. You might decide to use product assembly services in China since it’ll save your business money. Keep in mind that how skilled a manufacturer is will vary.
Some ways they can help include:
- Packaging products
- Manufacturing products manually
- Product assembly
- Creating computer models of products
- And more
When you’re first starting out with a production company, it’s a good idea to test out a contract manufacturer. See how their production process is and if it slows you down. You might find that you’ll have more time to focus on your business and productivity will increase overall.
Understanding the Benefits of a Contract Manufacturer
After exploring this guide, you should have a better idea of the benefits of a contract manufacturer. Take your time deciding if it’s right for your business.
Are you ready to speed up the process of manufacturing in your business?
Contact us today! We offer customized manufacturing, including developing new processes, using top-notch equipment, and customizing work procedures.
Manufacturing In China: How To Protect Your Intellectual Property?
It is not surprising that China has developed to become a major manufacturing superpower and more and more overseas companies have moved their production to China. However, some of them are having issues with IP protection while manufacturing in China.
If you are planning to manufacture your products in China, make sure you do everything possible to protect your intellectual property rights. Read on to learn more about the strategies you can use to avoid patent infringement issues in the Chinese market.
What Is IP?
Before you outsource your production to China, it is important to understand what happens to your intellectual property rights (IPR) once you outsource to a Chinese manufacturer.
Intellectual property is a broad term that can include anything from a new fashion trend to a specific software algorithm to an entirely new product design.
The World Intellectual Property Organization (WIPO) makes a definition of IP as “creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.”
No matter what type of intellectual property you have, there are some things you should know before starting manufacturing in China to ensure your intellectual property rights are protected.
Each Country Has Its IP Laws
Whether you are a small business or a large corporation, you have to consider how you’ll protect your intellectual property.
The first thing you should do is have a basic understanding of Chinese IP laws.
For example, patents for inventions can be protected for up to 20 years in China. Also, China protects utility models (for up to 10 years) and design patents (for up to 15 years). Utility models are sometimes called “mini-patents” and require a lower level of inventiveness. Design patents protect the look of products.
All patent rights in China are subject to the payment of annual fees after they’ve been granted.
The National IPR Organizations You Should Know In China
In China, the government plays a substantial role in promoting and protecting intellectual property rights (IPRs).
Several governmental departments are responsible for IPRs matters. Keep in mind the differences and functions of these organizations.
China National Intellectual Property Administration (CNIPA)
China National Intellectual Property Administration (CNIPA) was formerly known as the State Intellectual Property Office (SIPO). It was renamed in 1980.
The department is responsible for the patent work and comprehensively coordinating the foreign-related affairs in the field of intellectual property throughout the country.
If you want your patent registered in China, make sure you check these common questions that you will need to know:
Trademark Office of China National Intellectual Property Administration
When it comes to handling matters of trademark disputes, you should reach the Trademark Office of the China National Intellectual Property Administration.
It’s responsible for the registration and administration of trademarks throughout the country.
However, the website does not provide an English option, so it would be hard for foreigners to research and apply for a trademark online. Therefore, you can click on the CNIPA website to search for trademark-related information. Or you may go to the local trademark office to make an enquiry in person.
National Copyright Administration of the People’s Republic of China (NCAC)
If you want any copyright information, the National Copyright Administration of the People’s Republic of China website is a good option for you.
It accepts and examines copyrights applications in accordance with the law.
Keep in mind to check the copyright regulations and laws in China before you register your copyright.
IP Protection Agreement
When partnering with a manufacturing company, make sure you have a well-drafted and properly executed manufacturing agreement that will help you protect your IP, and provide you with relief if the manufacturer breaches the agreement.
The IP agreement should list all relevant details, including IP ownership, confidentiality, non-competition and non-circumvention and more.
Let Shield Works Be Your IP Protective Manufacturing Partner
With our British ownership background, we know how to help our overseas clients to protect their IPs without excessive costs and time.
Shield Works partners with Innopat a leading Zhuhai based IP industry expert to provide you with clear no-nonsense advice and IP protection services.
Our IP protective system safeguards your production line in our innovative facility.
We are ready to accommodate your needs. Contact us today.
3 Tips For Finding The Right Custom Manufacturing Partner In China
When you need to source custom manufacturing services, it can be hard to know where to start.
Finding the right custom manufacturing partner can be challenging.
There are many companies out there with the capabilities to manufacture your product, but finding the right one can be difficult and time-consuming without some guidance.
Thankfully, you don’t have to go at it alone. Here are three tips that will help make finding the right partner much easier.
Tip #1 – Know What You Want
Start by listing your needs and expectations before choosing a custom manufacturer in China.
- What’s your budget?
- Do you have a strict deadline?
- Are your product materials hard to obtain?
- Will you need samples before production begins?
All of these details can help narrow down your list of potential partners.
Finding a company that already has experience with similar projects can make sure that production goes as smoothly as possible since they’ll be familiar with what it takes to meet all your needs and deadlines.
Tip #2 – Understand Your Suppliers
Another thing to take into consideration when you’re looking for a custom manufacturer is to do your research.
Find people who have successfully worked with a company that provides custom manufacturing services.
If someone has had a good experience, you can use them as a reference to find other companies that provide similar services in case their recommendation didn’t work out so well.
Also, you can compile a comparison list of potential options.
After you list all the key factors you need to know beforehand, you’ll be ready to begin contacting them directly.
Tip #3 – Choose A Custom Manufacturer That Fits Into Your Supply Chain
Choosing a custom manufacturer requires an understanding of how they fit into your supply chain.
If you are looking to get started with rapid prototyping, then your supplier must have access to both traditional and 3D printing equipment.
This will allow them to offer you a full range of services including design iteration and custom parts made from advanced materials.
If, on the other hand, you are looking for custom injection molding services, you need a manufacturer that can handle creating tooling and assembling large quantities of products efficiently.
Remember: your final product will only be as good as your supplier’s capabilities!
Let Shield Works Be Your Custom Manufacturing Partner
If you need to customize your product, Shield Works can be your best partner in China.
We are a British owned and managed company providing customized OEM manufacturing and assembly activities.
Your product will be manufactured in one of our state-of-the-art facilities. We are prepared to accommodate your needs; from bulk production through final product finishing. Contact us today.
Why Outsourcing Medical Device Manufacturing to China Benefits You
You’ve come up with an innovative new medical device or equipment, and now you want to get it into the hands of doctors and hospitals across the country. You could just hire someone in your area to build it all by hand, but that would take much longer than you’d like, and you wouldn’t be able to produce as many units as are necessary to meet your demand and get it out there quickly. By outsourcing medical equipment manufacturing to China, you can save both time and money, while ensuring quality production that meets your exact specifications. Check out these tips of outsourcing medical equipment manufacturing to China!
Selecting a Contract Manufacturer in China for Your Medical Device Product
Choosing a contract manufacturer in China for your medical equipment product can be an overwhelming task. Before you begin, it’s important to have a clear idea of what you need and what steps you will take during your search. Once you have a plan, it’s time to find a reputable company with staff that speaks English. Next, arrange meetings and build relationships with potential manufacturers. The next step is choosing which company will produce your medical equipment product.
You might as well as yourself the following questions:
- What type of medical devices do you have experience in?
- What is their track record?
- Do they use raw materials from other companies or do they purchase them themselves?
- Does each manufacturer offer fast turnarounds and great prices?
- How many years has each one been in business?
- Is there consistency among all of their products?
- Are there any customer reviews online about them?
- Can they produce products in compliance with FDA or health and safety regulations in other targeted countries?
If you are going to export to the US, do some digging on the FDA database to identify the certified manufacturing and filter out the bad seeds with track record of practice or products violating regulations. At times like this, this step should be addressed with extra importance as the regulations are always subject to change. Finally, once you’ve chosen a contract manufacturer in China for your medical equipment product, make sure to sign contracts before beginning production.
It’s also important to make sure everything is written down clearly so there are no misunderstandings later on, including the specs required by the health department. If possible, try to get samples made by both companies before making a final decision. This way you can compare quality and price side-by-side before deciding who gets the job. You want to work with someone who not only meets your needs but also exceeds expectations at every level!
Benefits of Manufacturing Your Medical Device Product in China
When you outsource your medical device manufacturing, you gain access to the following elements of production.
Quality control
When you contract with a Chinese manufacturer for your medical equipment, they will send engineers and representatives to oversee production. This means that when it comes time for delivery, your items will be free of defects and exactly as specified in your contract. It also means that any errors made during production will be caught early on so they can be corrected before being shipped out. Having someone overseeing production ensures that nothing slips through the cracks and helps prevent mistakes from occurring later down the line. Also, as we have stressed the importance of adhering to the health and regulations issued by the countries you export to, experienced teams in China should know these rules like the back of their hand and strictly perform compliance checks for you.
Cost savings
When compared to American companies specializing in contract manufacturing, Chinese companies often offer lower prices due to their lower labor costs. By outsourcing your medical device manufacturing, you’ll have more money available to invest in marketing or research and development. Also, when it comes to manufacturing medical products, sometimes it’s tricky to strike a balance between maintaining required specs and budget control. China’s experience can be of great help in this regard.
Better Time Management
This also allows you to focus on creating your unique product, while allowing a 3rd-party manufacturer develop and produce it for you and help you better manage time, resources and costs; furthermore, because they’re focused on manufacturing one or several products for multiple companies, they’re able to handle much larger volumes than most startup companies can handle. This means that when you partner with them, you won’t have bottlenecks or downtime that could lead to delays in production or delivery.
Flexibility
A lot of contract manufacturers overseas are willing to negotiate terms based on how much work they have at any given time. If there is no work coming up, then they may agree to do a small project for less money than usual. This gives you an opportunity to get additional products made without having to pay full price—something many businesses find useful since cash flow is always tight when starting up new ventures.
Working with overseas manufacturers has its own set of challenges; however, if you approach them carefully and build relationships with them over time, it’s possible that outsourcing could help make your business more successful.
Examples of Medical Device Products That Can Be Manufactured in China
A lot of medical device products are produced in China, including ventilators, cardiac monitors, blood pressure monitors and infusion devices. Sometimes manufacturers can create a better product than your competitors by using specialized suppliers or materials they have on hand. Contracting with a company that specializes in manufacturing medical equipment makes sense since outsourcing allows them to control quality and make sure everything is done within your timeline. You may have not considered outsourcing your medical equipment manufacturing because you don’t think it would be possible; but it is, and you may want to.
To learn more about how to take advantage from the highest quality of medical device products from Chinese manufacturing companies who know all the western industry standards or to speak with experts with this regard, feel free to reach out and get in touch with us here at any time!
6 Tips for Outsourcing Electronic Manufacturing to China
Do you have an electronic product or system design that’s perfect, but don’t have the budget to manufacture it? Would you like to get your product on the market faster than would be possible by in-house manufacturing? If so, consider outsourcing some or all of your manufacturing to China. If you choose to do this, it’s important to plan ahead and ensure that everything will run smoothly. Here are six tips for outsourcing electronic manufacturing to China
Start Small
If you have no experience with manufacturing, then begin by outsourcing one small job. This will give you valuable insight into how your product is made and how much it will cost. If everything works out, then you can consider larger production runs later on. It’s important to remember that outsourced electronic manufacturing is generally a process-driven industry, which means costs vary greatly based on scale. In addition, don’t forget that different suppliers specialize in different areas of electronic manufacturing, so choose wisely and select a company that specializes in your specific product!
Choose a Reputable Supplier
While there are numerous suppliers located in China, it’s important to choose one that is reliable, bilingual and experienced with western culture. The process of outsourcing electronic manufacturing to Chinese factories is a detailed one, and requires a bilingual manufacturer with experience in your product industry. Asking around at trade shows or on websites such as Alibaba can help you find just that. Once you’ve found a factory you like, make sure to check out their work (website photos are not always representative of actual products), and write up an agreement that outlines both parties’ responsibilities before any manufacturing begins. Once you have a contract signed by both parties, it is time to start gathering documentation required by customs officials.
Understand Costs
Before you outsource, it’s important to understand your costs. You need a good sense of what you’re going to have to spend in order to get your electronic product made in Asia. If you are outsourcing electronic manufacturing in Shenzhen, China, take some time and learn about all of your options before making a final decision. Costs can vary depending on if you are looking at domestic Chinese companies or manufacturers that are located outside of Shenzhen but still within Mainland China. Some companies will quote higher prices due to their experience working with larger manufacturers and being able to offer high-quality parts faster than smaller shops who may not be as experienced with large OEM orders.
Get Samples
Before you invest in getting a bunch of units manufactured, it’s always good to try a sample run first. This way, you can test whether there are any flaws with your design and get a sense of how many revisions your manufacturer will ask for before they produce quality products. There are also some up-front costs associated with getting samples, but it’s still much cheaper than going through a full production run only to find out that something is wrong. And once you’ve got samples in hand, you can even use them as leverage to negotiate better prices from your factory.
Save Money with Fewer Prototypes
When developing a new circuit, it’s important to test each new iteration by building a prototype. Unfortunately, prototyping is expensive, especially when you factor in labor costs. The more prototypes you need to create and test, the higher your bill will grow. One way to save money on manufacturing is outsourcing your prototyping work overseas. You can get a board made quickly and affordably at Chinese manufacturing houses like Seeed Studio and Canavas.
Make Your Specs Simple
To reduce costs, you should make your specifications as clear and simple as possible. This is especially true in regards to materials selection. For example, if you need 100 circuit boards made and one of them requires a rare-earth element found only in one mine in Russia, be sure that’s stated up front. On top of reducing costs, clear specs also improve communication between you and your manufacturer.
Shield Works is one of your best choices with a self-owned IP protection zone, in-house bilingual engineering team and over 16 years of experience of manufacturing in China for clients worldwide, especially in electronic manufacturing. Please feel free to contact us if you are interested.
Why Outsourcing Manufacturing to China Is More Financially Reasonable
As your business grows, it’s likely that you’ll begin looking at outsourcing some of your manufacturing processes to other countries with cheaper labor costs, such as China. The problem with this practice in the past was the amount of time and money it took to hire workers overseas, monitor their progress, and then ship product back to your warehouse once they were finished. Today, contract manufacturing in China make all of these things easier, making the financial benefits that much more attractive.
Shipping Costs
Depending on where you source your goods, costs for shipping can be prohibitive. Before deciding to manufacture abroad, make sure you fully understand all shipping costs and regulations. In some cases, it’s cheaper to have a freight forwarder who specializes in international shipping do all of your importing from a single location, instead of importing from multiple countries with multiple carriers. On top of import duties, make sure you factor insurance into your cost breakdowns as well. If you’re not handling all shipping related tasks yourself, make sure you find someone who is qualified to handle these duties; if done improperly, shipping companies could lose or damage inventory which could lead to costly product recalls down the road. China’s labor forces are less expensive than other regions while its developed infrastructures mean that delivery times will be shorter because products will spend less time getting through customs. Many large retailers use Chinese manufacturers due to their central locations and short delivery times — many major ports in China are only a few hours away by ship — compared to other manufacturing locations like Mexico or Brazil, which could take up to two weeks for products to reach their destinations by sea.
Currency Conversion
One of the most common concerns about investing in Chinese manufacturing is currency risk. But RMB is very stable given the current climate. It has appreciated a mere 1.3% against the USD over the past year. And, looking back to 2005, when China joined the WTO and opened its borders to western-style investment and trade, RMB has only depreciated roughly 4%. There’s no reason not to be bullish on RMB for years to come. The currency is well-managed by the Chinese government (albeit with some nefarious strings attached), making it a very safe bet for dollar denominated transactions.
Freight Forwarder Costs
Freight Forwarders cost less in China, both in price and percentage of gross profit. Generally speaking, freight forwarders keep anywhere from 5% to 7% of a company’s gross profit as their service fee, but in China they can often cut that to 3%. For example, take a 4 million dollar shipment: A Freight Forwarder might only charge $80,000 instead of $200,000.
Quality Control Costs
There are many reasons why quality control services in China are cheaper but better than many other countries. Quality control services in China have been developed for years, and it has become mature enough. The cost of quality control services in China has been reduced a lot, and it’s much cheaper than other places like Hong Kong and Taiwan. Factories pay less attention on their manpower costs, they tend to hire more workers with less experience and skills, which makes the production lines much slower than before. Factories produce their goods with lower requirement of quality than international standard levels because they hope to sell them in domestic market easily, not paying too much attention on products defects caused by human errors.
Labor Costs in China
Labor costs are still lower than other countries despite rising and labors there are more skilled. While the rise may seem like it’s not worth taking a risk on an overseas location, consider that other manufacturing countries such as South Korea and India have labor costs that are double or even triple what workers make in urban areas of China. Furthermore, according to management consultant The Boston Consulting Group (BCG), labor productivity actually increased in 2013 by 18%, which means that wages have been increasing steadily while work conditions remain favorable for employers. Owing to its high-quality workforce, innovative industry and strong infrastructure network, China has built up global supply chains over time. Most companies choose to locate their factories there due to its strategic location connecting major Western markets. Despite being 3 times farther away from Europe than Mexico and almost 4 times farther away than Bangladesh, more products go through Chinese ports into Europe because Chinese coastal cities are closer.
How Does This Relate To My Product Idea?
You can focus more on renovating and marketing your product by outsourcing manufacturing to China. Since it costs less to manufacture abroad, you can put that money back into your product and save a bundle on quality control in China. If it doesn’t work out, you can switch factories easily without losing much of your initial investment. However, outsourcing isn’t right for every type of business and manufacturing abroad takes time to figure out—but if you’re willing to take a risk and have faith in your company’s vision, getting started with China production could be a smart choice for your bottom line.
With the British background and China base of Shield Works as well as our international bilingual team members and 3PL services worldwide, it is a great option to enjoy quality of China manufacturing and hassle-free process. Leave all your manufacturing troubles to us. If interested, please feel free to contact us.
7 Ways the Supply Chain Crisis Has Changed Outsourcing Manufacturing
The year 2021 was synonymous with shortages in almost every industry. Across the world, some product shortages meant that shelves were empty and the demand for products outstripped what was available.
This isn’t a problem that’s going away anytime soon. Experts have indicated that global supply chains could be affected for up to two more years.
This is changing the way that companies approach outsourcing manufacturing.
In this article, we will take you through the 7 ways that the supply chain crisis has changed outsourcing manufacturing and what options are available to businesses.
Read on to find out more.
1. Implementing Company Emergency Plans
Company emergency plans are in place for a reason. Supply chain disruptions or breakdowns in production lines can be costly for any business that relies on providing a product or service to customers.
It’s having the infrastructure and policy in place for those ‘what-if’ moments. A contingency plan for different scenarios is critical for those businesses that need to react quickly when something goes wrong.
Whether that’s changing your outsourcing manufacturer, or changing your shipping routes, a plan needs to be in place for every eventuality.
2. Looking Further Afield
The supply chain crisis has had businesses investigating new ways to increase outsourcing. Many companies were unable to rely on domestic assembly lines and factories in 2021 due to the number of workers that were sick or ill from COVID 19.
Booming manufacturing markets in China mean that companies can still get excellent results and products, just overseas.
You don’t even need to feel as if you’re on a different continent. With state-of-the-art technology, you can get direct video footage of your products being prepared in the warehouses.
This means you can have peace of mind when it comes to the quality of your products.
3. Assembly of Products has Become More Challenging
If a company is relying on several components in a supply chain, this is where problems can emerge. If there’s a shortage in one component or product, this slows down the overall build of a device or item.
If the delayed item is integral to the overall build of a product, this means the product can’t be completed and sold to the customer. If there are delays on several components, this can be detrimental to the supply chain.
This is why some companies are moving away from fragmented production lines and looking to streamline all of their product components with one company or warehouse.
It ensures that products aren’t being delayed any further than necessary and that there aren’t any vital pieces missing.
4. Ordering More Products Through Outsourcing Manufacturing to Store
It’s not just consumers that realize they may need to stock up more. Businesses and companies are ordering in and storing more items on a large scale than previously before the pandemic.
With demands for items at an all-time high, it’s important that companies have enough stock to last them for a longer period of time.
Problems in ports and unloading items have also delayed steps in the supply chain. The Suez Canal crisis was estimated to have held up $9.6 billion of trade per day of the blockage. It also affected global oil prices as well as global supply chains for weeks after.
Events such as these are rare, but they can’t be ruled out happening again.
If a company knows their busiest time of year is Christmas, it’s essential that they have the surplus stock ready for November and ready to be shipped domestically.
5. Redesigning Products for Streamlined Production
Some larger companies have gone to great lengths to ensure that they are able to keep up with their outsourced manufacturing. This includes redesigning their products so they don’t have to wait on supply chains for their different components.
Especially in tech products, this is a trend that will continue to develop in the next few years.
Businesses are weighing up their options and working out which is the most efficient way to build their products, without being held up in long supply chain delays.
If there are chip shortages, businesses are shopping around to see what the wait times and price points are.
6. Supply Chain Vulnerability Audits
Companies are trying to learn from their mistakes and supply chain errors of 2021.
Mistakes do happen and it was an unprecedented situation for many businesses, even larger ones that have the necessary capital and infrastructure.
Many companies are now carrying out their own supply chain vulnerability audits. This means that they can pinpoint any weaknesses and gaps and pivot to a more efficient way.
Whether this is changing their outsourcing manufacturer or ordering products on a larger scale, it’s important that mistakes can be used as a learning experience.
7. Adjusting Targets for Production
If your production and output were drastically down for 2021, that’s something that was true for a lot of companies the world over.
Nintendo, for example, was short of its production target due to supply chain issues. The simple fact is, you can’t finish a product if you don’t have all the pieces for the job.
Supply chain problems aren’t going away any time soon. It can be helpful to make reasonable adjustments to your production targets to combat this global issue.
Outsourcing Manufacturing: What Can You Do for Your Business?
The supply chain crisis is the result of a myriad of problems, in conjunction with the pandemic. One way to combat this is to reevaluate your outsourcing manufacturing.
Take a look at the services we can offer your company, from manufacturing to assembly to warehousing.
We’re a reputable manufacturing company with 16 years of experience in the field.
Fill in our contact form and one of our expert team will get back to you shortly. We look forward to making your outsourcing manufacturing a lot more straightforward.