• Taiwan V.S China offshore manufacturing

So you have a prototype and designs made for a product that you’d like to develop – and you are ready to follow through to manufacturing (and you have a solid strategy for your sales and marketing).


Like many entrepreneurs or inventors you’d like to keep your manufacturing close to home and create jobs in your community, you hope. Sometimes this strategy makes sense, but sometimes this option just isn’t available and scaling down your manufacturing costs can mean the difference between success and failure for your business. After all, you’re no good to your community with a good idea but bankrupt and insoluble business.


In your business there will come a time that you will consider outsourcing your manufacturing overseas and you will need to examine your options, and the pros and cons of each choice. In the spirit of full disclosure Sourcing Overseas is in the business of assisting businesses to safely and securely setup their manufacturing overseas. However, you would be surprised how many clients or prospects we advise to keep their manufacturing local. It all depends on the specifics of your project.


For most, the first country that comes to mind when thinking about outsourcing manufacturing is China. But the story is really much bigger than that and while China might be the outsourcing destination of choice if you plan to make millions of your ‘widget’, we actually recommend countries like Taiwan (where we are based) and Vietnam for most small to mid-sized businesses, as a better cost-to-quality proposition.


Sino-Asia

Consisting of nations such as China, Taiwan, and Hong-Kong. This region is leading the way in both high and low technology products. Over 90% of the worlds IT products come from only these three players. Additionally plastic injection and factory line work with semi-skilled labor are a strong point. They also boast a very well developed manufacturing and supply chain infrastructure.


Taiwan

Taiwan has been a true “shining star” of the technology sphere for the past few decades. Their skill and innovation have remained relatively unmatched, certainly amongst the sino-Asian countries, and their on-par with their close neighbors Korea & Japan in terms of quality and technological know-how.


Many global tech giants base their HQ and R&D out of Taiwan tech-parks, and from there oversee operations in their factories and production lines in China. Most do also have subsidiary production facilities in Taiwan, usually dealing with the high-technology product lines and development departments.


Taiwan has well established shipping ports both in the north and south of the island. These serve as hubs for many international shipments, and almost all reputable logistics companies have a branch office in close vicinity. Transporting goods within the country is relatively expensive, however this is offset by the small size of the island and the proximity of factory locations to the main shipping ports.


Stable and stringent government regulation place high emphasis on protection of intellectual property and IP theft is not commonplace as it once was in this region. Export laws and tariffs are strictly upheld and documentation errors can land your shipment in the hands of the customs control – and although always a troublesome occurrence, government and control operations move very smoothly in Taiwan and your shipment should be cleared within a few weeks.


Expect to be paying nearly 30% more than what you would be paying in China for factory man-hours, tooling & molding and per-unit costs. However, this is not as bad as it might sound because the higher cost is almost always accompanied by superior quality, more reliable scheduling, and lower order quantity requirements.


China

While a growing middle class and rising labor costs have been steering China’s economy toward a more consumer-driven one, China’s place at the top of the global manufacturing food-chain will remain un-contested for many years to come. Its well-developed logistic lines and supply chain through Hong Kong and neighboring countries gives it secure resource lines and export channels.


Although China does sport many of the infrastructure advantages one would expect from a production center, the fact remains that it is still very much a developing country. This reality is played out in the culture of the workforce and their approach to such things as quality, agreements and intellectual property. Also, the labor conditions and working standards in some rural regions are much worse than they are thought to be.


An increasingly skilled labor force is a growing trend as factories strive to educate and train their workers in both technical work skills and ethical work habits. But highly trained workers are usually retained in the companies that provided them their training (usually large name brands and corporations) So while many small-shop factories who cater to small and mid-sized clients do have expertise and professionalism in their field, there are equally as many who don’t.


Each one must be carefully selected, vetted, and verified before beginning any business relationship.


Throughout the development and planning phase solid NDA contracts are essential to protect your intellectual property. However, if your ideas are worth their trouble stealing – the reality is that an NDA will do little or nothing to protect you in China as they are not often upheld by the courts.


Personal on-site management is essential through the initial stages, after production has been setup and smoothly running through a few trials, operations can then be handed over to a a trained team to oversee. Even then, you will need to always take a pro-active stance to check for anything they may have missed.


At the end of the day our rule of thumb is that if you don’t envision yourself needing more than 50,000 pcs of your product in the first year then you should look at one of the smaller, more skilled production centers in Asia. Then once your sales grow and demand for your product increases you can look at taking advantage of China’s economy of scale and move your manufacturing over there.


Reach out to us today for a no-obligation project review and quotations, and kick start your project to commercial success!

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About Us

Sourcing Overseas is an all-in-one offshore manufacturing consulting and product development firm whose mission is to bring your product from ideation to launch in a seamless manner, freeing you to build a successful business. Through years of experience, we are well-equipped to offer you a sophisticated and proven service that have helped hundreds of other clients to facilitate successful product launches. Just think of us as an extension of your company, your very own expert engineering and project management team.

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