• The pros and cons of manufacturing overseas

 
chn1

IMAGE: USCNPM

When you are making the decision whether to have your product manufactured domestically or overseas, some of that decision may be made for you depending on the type of product that you want to make and what your expected production volumes might be.


If you have a product that is highly specialized and demands a reliable timetable, domestic manufacturing will probably be best. However, if you have a less time-sensitive product, i.e. having no issues with the approximately 4 weeks or so that it takes to ship and clear customs, are considering placing orders in higher quantities (500+), and are able to accept upfront payment of fees and production costs, then you can often save considerable amounts of money (which goes straight to your bottom line) by shifting your manufacturing overseas.

Some examples of products that do well to be produced in overseas factories are:
• Apparel products
• Electrical components
• Household Appliances
• Medical supplies and pharmaceutical products
• Toys and board games
• Leather goods
• Plastic injected parts
• Consumer electronics
• Any labor-intensive product

Prior to deciding whether to engage in international or domestic manufacturing, you must first do your due diligence on your potential overseas manufacturing partner. There are a dizzying number of overseas suppliers and factories to choose from, and from many different countries. Starting with getting a high-quality prototype made is one way to gauge quality and professionalism, and of course to research and vet the company’s reputation, track record, business practices and standards. Ultimately, you are looking to maximize customer satisfaction, so you must find a supplier or overseas manufacturing partner that fully understand your needs, and cares about the success of your business as much as you do.

Choosing to outsource your manufacturing can potentially reduce your costs of labor by up to 80% depending on the labor intensity of your product. The reduced operating capital will allow you to channel more funding towards marketing, research and development, salaries, as well as other areas that can help improve your bottom line. Moreover, there are also many incentives by the Chinese agencies that are targeted towards attracting foreign investors. Your products can also be manufactured very quickly and at excellent qualities when coupled with extensive quality control measures as many Chinese plants are equipped for large-scale manufacturing sporting the latest and greatest in manufacturing technologies in order to remain competitive. Many manufacturers are also early adopters of innovations such as rapid prototyping and 3d printing in order to gain an edge over the competition.

The typical pros for manufacturing overseas are:
• Cost effectiveness
• Shorter manufacture to market time (access to more manpower)
• More work delegated to others, so you can focus on your core abilities and growing your business
• Reduced real estate and plant costs
• Increased operating capital and cash flow
• Fewer regulations
• Access to large pool of skilled workers

Some Cons for manufacturing overseas are:
• Larger order quantities required
• Requires up to 30% deposit upfront for production in most cases
• Must pay in full before shipment leaves port in most cases
• Risk of damage to your product is higher (get shipping insurance!)
• Unable to use the “Made in USA” stamp or hook in your marketing
• Reliability is also another factor that may make it difficult for you to meet deadlines
• Language barrier

If you are thinking of off-shoring the manufacturing of your product but are not sure where to start in selecting a reliable and trustworthy manufacturing partner, then reach out to us to get started to bring your product idea to life now!

Discover more great inspiration from Sourcing Overseas

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.

Copyright 2016 Sourcing Overseas Co. Ltd All rights reserved (USA)1 800 724 9594 (Taiwan) 886 2 28365589