Manufacturing: The End of Cheap China

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Manufacturing The end of cheap China

• China is the world's largest manufacturing
  power. Its output of televisions, smartphones,
  steel pipes and other things you can drop on your
  foot. The main motive behind sourcing China is to
  procure goods for cheap.

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A cheap manufacturing facility would
typically be a high-volume, low-complexity
products factory and these are some of the
things you are likely to witness there Minimum
amount of pre-production work Absence of
dedicated lines Minimal time spent on each
product by production operators More
importance given to price than quality
Short-term mindset
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• China now accounts for a fifth of global
  manufacturing. Its factories have made so much,
  so cheaply that they have curbed inflation in
  many of its trading partners. But the era of
  cheap China may be drawing to a close.
• Costs are soaring, starting in the coastal
  provinces where factories have historically
  clustered

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• Those importing goods from China for the first
  time are largely unsure of the country's business
  environment, which is in sharp contrast to that
  of the West. The services of sourcing agents are
  thus seeked to help navigate these risks.
• And though an authentic China sourcing company
  can really help in sharing the burden, there is a
  downside as well to using an intermediary.

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• Sourcing agents also generally get paid a
  percentage on the total order value in addition
  to the hidden commission - dependent on the fact
  that the order gets shipped and paid.
• Which implies that they have an incentive to
  see the order go through. High price often
  dissuades a purchaser from placing an order.
  That's another reason why prices in China are
  strategically kept low.

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Remember, whether they are capable of fulfilling
it satisfactorily or not, everybody in China is
out to grab your order. It is known to them
that, once they got you to spend weeks or months
to refine samples and once they got your deposit,
it is much harder for you to switch to another
supplier. If you are planning to develop a
strong supply chain to support your business into
the future, the time and money spent in the
pre-deal analysis, will prove to be quite an
investment.
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