Outsourcing to the Far East is often demonized – but there are many good reasons for sourcing from China. In specific circumstances outsourcing production can offer real benefits to Western companies – improving the international competitiveness of Western manufacturers, and enabling new product development projects to get off the ground.
In summary there are two main drivers:
1. Reduce tooling costs
Without the option of low cost tooling from the Far East many new projects simply wouldn’t get off the ground. In our experience many inventors will already have approached local factories and found Western tooling costs to be too high for their budgets.
This said, this not is a black and white situation and for some projects it will be cheaper and easier to source locally.
2. Increase international competitiveness
We live in a global economy whereby many Western companies would love to export to other markets – to retain international competitiveness this may mean sourcing some parts locally and others from low cost countries. Many of the larger manufacturers we deal with have a global sourcing strategy that may involve buying locally or abroad over time in line with changing exchange rates etc…
Choosing the right product for outsourcing
Customers should therefore a maintain a global sourcing strategy – keeping the option to manufacture in the West if economic conditions are more favourable for a given product (as they were recently with the declining pound). Retaining the option to manufacture in the West also provides a fallback option if outsourcing projects do not provide the desired outcome.
Not every product is suitable for outsourcing to a low cost country. In our experience products that are highly automated, attract high duty, are bulky, or are high tolerance generate the lowest cost saving from Far East sourcing. Any project with a high level of labour input can generate landed cost savings up to 40%.
How to get started: There are essentially 2 ways to find a reliable Chinese factory for sourcing products from China:
1. Work with a China sourcing agent.
2. Contact factories directly through a China sourcing directory