If you’re like most North American manufacturers, you’d rather keep your manufacturing close to home. But that isn’t always an option when it comes to lowering your costs and staying competitive. Streamline Sourcing is an American company with networks of manufacturers in both China and in the US. Our objective is to find the best solution for your needs. If manufacturing overseas will not benefit your business (and consequently the American economy), we’ll let you know.
As you’ve heard, wages have been rising in China. The sweet spot of manufacturing over there has shifted. There are plenty of consumer products and manufacturing processes (hello apparel) that don’t make sense in China anymore. But the cost of skilled labor is still significantly lower in China. And skilled labor is often required on parts and products of higher quality and higher complexity. China is now a perfect location for high quality, complex, industrial manufacturing.
Contact us now to find out if manufacturing in China is a fit for your needs. If not, we also have a network of shops in the U.S. to help you keep your costs as low as possible and keep you competitive!
Prototyping and New Product Development
Prototyping and new product development is extremely challenging in China. Most good product development requires dozens of costly prototype iterations and extensive testing. While this may be somewhat less expensive in China, the process is also a lot less efficient.
Prototype cost savings usually gets erased by the transportation costs due to the fact that prototypes require air shipping. New product development times are a lot longer since each prototype iteration gets shipped back and forth for evaluation, troubleshooting, and feedback. And despite advances in internet communication technology, there is nothing more effective than having the new product designer and manufacturer in the same room (or even the same city). Therefore, we highly recommend doing your new product prototyping, development, and testing in the United States.
While prototyping and testing is most efficient in the US, you will find that the cost effectiveness ends there. Even domestic manufacturing runs of up to 1000 units often do not allow you to meet your target prices. Therefore, the perfect time to move your production to China is when you have met the following criteria:
Completed prototype development
Completed prototype testing requirements
Completed a short run of samples for marketing purposes
Conducted market research
Established target pricing requirements
Established initial demand and annual volume requirements
Established a distribution channel
As a very general rule of thumb, when your volume requirements allow you to fill a shipping container, then manufacturing in China begins to become cost effective for you. Any smaller volumes and the transportation, tax, and duty costs tend to wipe out any savings you will enjoy by manufacturing in China.