Top 5 benefits of outsourcing manufacturing and product development to China

China is the global powerhouse of manufacturing. It offers significant benefits to US companies outsourcing their production and development projects.

While selecting an appropriately experienced factory can take a little time, the advantages in scalable manufacturing capacity and access to product innovation are unrivalled in China.

Whether you are assessing the pros and cons of outsourcing parts production for CNC machining services or looking into commissioning a standalone product development initiative, it’s vital to evaluate the convenience on offer.

Today we’ll run through the top five benefits of outsourcing manufacturing and product development to China, so you’re fully aware of the opportunities.

1. Outsourcing production to reduce overheads

A Chinese production team with years of expertise will offer a complete in-house service, from quality control to laboratory testing, manufacturing to material sourcing.

This comprehensive service reduces the time burden and financial costs of piecemeal manufacturing processes.

Cost reductions result from:

• Reduced reliance on third-party professionals, such as graphic designers.
• Economies of scale in raw material sourcing.
• Lower labour costs, around 80% more economical than in the US.
• Eliminating overheads associated with domestic production.
• Inclusive rates, covering elements such as insurance.

While price points aren’t the only driver of sales success, controlling your overheads is crucial to business growth.

Almost any commodity or product manufactured in China will cost substantially less than domestic production – even with sea or air freight expenses factored in.

However, it’s worth acknowledging that the lowest costs will require you to commit to a minimum, either an MOQ (minimum order quantity) or MOV (minimum order value).

2. Improved production efficiency

Many Chinese factory districts specialize in one particular type of product. For example, most clothing is produced in Zhejiang or Guangdong.

Electrical production facilities are nearly always in Shanghai or Guangzhou.

This localization of sector manufacturing is a unique way to improve efficiency and benefit overseas clients.

Another factor in Chinese production efficiency is the pure scale of personnel available, meaning that it is relatively easy to staff all three shifts with competent employees.

If your business requires high-volume production, continuous resupplies, or a fast manufacturing cycle, an efficient Chinese factory will be happy to oblige.

However, please note the potential for pricing uplifts on urgent orders.

3. Access to first-hand industry innovations

We’ve mentioned that Chinese manufacturers tend to be located in groups by industry.

This framework is optimal for efficiency and lowering costs, since such locations are often selected for proximity to docks, mills, or raw material production.

A network of specialisms creates a pool of innovation, with many first-to-market products made by Chinese product development teams, driven by the steeply competitive environment.

There are several reasons why Chinese manufacturing professionals lead the market in product development:

• Sampling and prototyping is an everyday part of business, and creating alternative models from a variety of materials is a normal process.
• Factories in China often supply multiple clients in global locations and have an excellent overview of the latest products or technologies emerging in the sector.
• Experienced production managers can create product development strategies at little or even no cost to existing customers.
• Manufacturers in China source bulk components from some of the largest companies in the world – think YKK zips for sports clothing or battery packs for electric motors.

Product development and market innovation are simply easier, with direct access to packaging suppliers, sector production specialists, and inspiration from competing businesses all outsourcing to the same regions of China.

4. Diversification opportunities

In the past, many US businesses may have perceived China as a place for low-cost but low-quality production.

Now, as global trade becomes more accessible, those same companies recognize the size of the opportunity to sell to the largest population in the world, with a booming economy and a growing appetite for western merchandise.

Market diversification can take many forms:

• Placing products onto local markets, with 1.4 billion potential buyers.
• Reducing shipping costs by selling directly, without international transport expenses.
• Establishing local supply chains and grasping the opportunity to create domestic marketing strategies backed by your production partner.

Breaking into the Chinese market space can be extremely challenging but is infinitely more achievable with a local manufacturing depot on hand to make those crucial connections.

5. Flexible manufacturing systems

Finally, if you’re unsure whether outsourcing production and product development is the right solution for your business, it’s also wise to consider the flexibility of manufacturing in China.

Factories in China offer a wide range of scheduling options and can often handle:

• Regular ongoing production requirements.
• Long-term contractual manufacturing.
• Fast turnaround production for increased demand.
• High volume orders for critical trading periods.
• Support with lean manufacturing or just-in-time stock control.

Remember, a Chinese manufacturer will likely deal with a broad range of business clients and have experience in a considerable number of ordering and production management systems.

Whether you need to control production quantities, increase your volume rapidly, or identify more streamlined ways to maintain minimum stock levels, your outsourced Chinese production team will be able to make it happen.