Manufacturing In China
5 Reasons to Make Products in China
When companies make products, determining where and how to manufacture them is crucial. While some businesses are successful with a domestic manufacturing model, outsourcing is a better option in many cases. If a business owner is considering his/her manufacturing options, below are five compelling reasons to have products made in china.
Decreased Labor Costs
The US is 14th in the world in terms of compensation and wages for manufacturing workers, and in China, laborers are usually paid much less. The average hourly pay for a Chinese manufacturing worker is about one-tenth that of a US worker, and the labor savings can help companies lower their spending significantly. While saving is important, companies should ensure that they outsource in a socially responsible way.
Similar to the labor savings cited above, entrepreneurs can benefit from the decreased overhead that comes with manufacturing in china. Beyond the cost of renting a manufacturing facility, other expenses such as utilities, insurance and maintenance can be lower overseas. However, clients should consider the cost of shipping finished products back to the US when determining whether outsourcing is a viable option.
Many companies find it easier to set up a manufacturing operation overseas than in the US. Establishing a facility can be challenging, but when companies outsource, everything is handled. Many of the world's developing economies are dependent upon manufacturing, and this enables cost savings when US companies establish overseas manufacturing plants.
Allowing Companies to Focus on Other Factors
Another reason to set up a Chinese manufacturing operation is that it allows companies to focus on other operational factors. When things are made locally, a business owner may find themselves spending an excessive amount of time on supervisory tasks. When it's done in China, the company owner has to rely on others—which gives them more time to handle other jobs.
Closeness to Resources
In many cases, other countries such as China are closer to natural resources needed for the manufacturing process. Depending on what the company produces, finding domestic sources can be difficult and expensive. If other countries have better access to these resources, outsourcing simply makes economic sense.
Choosing where to start a manufacturing operation is a critical choice for any business owner. While some can succeed with a domestic manufacturing strategy, there are legitimate reasons why outsourcing is a viable option.