Before we discuss why many companies choose to outsource their manufacturing needs to China, let’s talk about what outsourcing is. The U.S. Bureau of Labor Statistics defines outsourcing as the movement of work that was formerly conducted in-house, by employees paid directly by a company, to a different company. When a company outsources their manufacturing needs, whether it be for parts or components, they reap a variety of benefits.
Reduce Your Cost of Labor
As you may already know, the manufacturing industry can vary from country to country. People that work for manufacturing facilities in the United States tend to be compensated fairly well, largely due to union protections. According to new data that was released by the Department of Labor’s Bureau of Labor Statistics, the United States ranks 14th in the world in wages and compensation for manufacturing workers. Across the ocean, things are very different.
Bonnie Kavoussi, a writer for the Huffington Post, has said that, the average hourly wage for Chinese manufacturing workers is less than a tenth that of their average U.S. counterparts. This means that when you send a concept, idea, or product overseas for manufacturing, it will cost you a significantly less amount of money to have these items produced. Some articles say that the cost of labor in China may be lowered by up to 80% when compared to these same services in the United States!
Low labor costs are one of the biggest benefits of outsourcing your manufacturing and fabrication needs. With the right partnership, your labor costs can be performed at a fraction of the price, which can save you money when it comes time to start packaging and shipping your product.
Access The World’s Largest Economy
Did you know that more people live in China than anywhere else in the world? Over the last three decades, we’ve seen a tremendous boom in growth in China’s economy. While trying to asses China’s market can be very difficult to do on your own, when you have an outsourcing agreement in place with a manufacturer, that difficulty is significantly reduced. If you’re thinking about offering your invention or product to the people of China, developing a partnership with a well known manufacturing company can help. Nurturing these business relationships can produce a lifetime of results for your company.
Stay Close To Distributors
While there are plenty of distribution facilities in the United States, a large array of distributors have found themselves placing a flagship operation in China. Opening a distribution sector in China has become very appealing due to the close proximity of the goods that need to be shipped. If you’re thinking about outsourcing your manufacturing needs to China, it may be beneficial to look into local distributors there as well. Not only will this lower your overall capital costs, it will help your bottom line as well.
Focus On What You Do Best
Another reason that many companies choose to outsource manufacturing is so they can focus on other areas of the business they feel are valuable. When you opt to have your parts or components made at a local facility, you might find yourself spending a lot of time overseeing various manufacturing operations. This can take time away from other important parts of your day that may need your attention. On the other hand, when you hire a manufacturing company abroad, you can focus your attention on what you do best.
