Is China On Its Way Out?
Some questions I often get asked are “Isn’t China on its way out?” or “Shouldn’t we be looking to manufacture in Africa, South America, or Southeast Asian countries?”
The reality is that China is set up like no other country on earth. China’s ability to draw on a variety of raw materials from different parts of the country and bring those together to produce parts which are then used to produce componentry which become final products is unprecedented anywhere else in the world. If you’re looking to manufacture a product of medium to high complexity, I’d say you’ll find it very difficult to bypass China completely.
If you’re looking to do your final assembly in another country, you will eventually end up sourcing some of your parts or componentry from China. So, you need to understand how manufacturing works in China, regardless of whether you’re looking to diversify and do some of that outside of China.
The main reason why people are now looking at other options is that Chinese labor costs have been rising for years while other countries’ labor costs are cheaper.
However, there are a lot of cons that you will find in other countries that you won’t realize until you are already too far down the track. China has a proven track record of what it can do, from low-end cheap widgets to high-end iPhones and everything in between. Other countries simply don’t have this range or the range of services.
Another thing that many people overlook is that, over decades, China has been steadily increasing its skill levels in many industries across a variety of materials, parts, and componentry. This depth of skill is priceless when your number one priority is a high-quality, consistent product on which you are trying to build a brand and a company. Countries with cheaper labor costs will likely struggle to ensure a base level of skills, especially across the broad range that China can provide. With China, you can create the product you want if you go through the process and the steps properly.
The example below highlights this issue:
We were working with a factory that made high-end backpacks for a German company, which were very complex in terms of the sewing and the various buckles, zips, and the way that the whole backpack came together.
They decided to move offshore to a factory in Vietnam because they could get the unit price lower due to cheaper labor costs. A year after they moved to Vietnam, they were moving back to China. They had discovered a range of different issues in Vietnam that weren’t present in China.
One of the main problems was the skill level. Although it seemed like sewing should be something that is consistent across the board, the level of skill required to sew these backpacks versus sewing a simple t-shirt was vast. Also, the quality issues that they faced across the board forced them to go back to China because the difference in unit cost didn’t outweigh the issues that they were running into.
To sum up, while there may be labor cost advantages to exploring manufacturing in other countries, our experience has taught us that these advantages are usually outweighed by the depth and breadth of skills, knowledge and experience of the Chinese manufacturing industry. It’s simply unbeatable.
Debunking the Myth of “Made in China = Poor Quality”
As founder of China Connect Advisory, I feel compelled to address a common yet outdated misconception that continues to hinder business owners, innovators, and product designers—the belief that products made in China are synonymous with poor quality. In this post, I aim to show an alternative perspective on this misconception and highlight some obvious but often overlooked truths on the real nature of manufacturing in China. I will challenge some long-held assumptions and discuss how we as consumers really hold all the power.
1) Defying the Perception: Highest Quality, Made in China
The irony lies in our daily reliance on products of the highest quality that are, in fact, manufactured in China. Take our smartphones, for instance. We expect flawless functionality, and by and large, they deliver. If China can produce such exceptional products, why do we associate quality issues solely nwith products made there? It’s time to reverse this outdated thinking.
The truth is that China has emerged as a major player in global manufacturing, continuously showcasing its ability to create products of the highest quality. The technology sector is a prime example of China’s remarkable capabilities. Innovative goods, ranging from smartphones to cutting-edge robotics, are created to not only satisfy the high expectations of today’s consumers but also the strictest international safety and compliance regulations.
2) The Client-Driven Manufacturing Paradigm
The truth is factories in China solely produce what their clients expect and demand. The responsibility lies not with the factories themselves but with the companies that place orders. They manufacture products designed to cater to the end consumers—us. This crucial understanding shifts the blame away from the factories and places it where it truly belongs—on us as consumers, our preferences, and choices.
As business owners, innovators, and product designers, we possess significant power to shape the manufacturing landscape. Our purchasing decisions directly influence what gets produced and where it is manufactured. It is our demands and expectations that guide the factories in China. If we continue to purchase certain products, companies will place orders with Chinese factories to meet our demands, perpetuating the cycle of production.
3) Empowering Consumer Influence
Here’s where the power of the consumer truly manifests. Every purchase we make contributes to the demand for specific products. By actively choosing to support certain products and refrain from purchasing others, we shape the manufacturing landscape. If a particular product fails to meet our expectations, it’s within our control to signal our dissatisfaction through our purchasing decisions.
Factories in China only manufacture what their clients expect them to make, and their clients only order what they know they can sell to an end consumer – us. We have all the power in this. Blaming factories in China for poor quality is just taking away our own power. If all of us as consumers decided to stop purchasing a certain product, then that company would stop ordering that product from factories and immediately that product would stop being manufactured in China. It really is as simple as that.
4) Quality vs. Price: The Inevitable Trade-Of
It’s crucial to acknowledge the unavoidable trade-off between quality and price. A product priced significantly lower than its high-quality counterparts will require compromises in terms of craftsmanship and durability. However, if exceptional quality is our priority, we must be willing to invest accordingly. Seeking smartphone-like quality at a fraction of the price is simply unrealistic. We must be conscious of our choices and be prepared to pay for the quality we desire.
Conclusion:
In conclusion, let’s dispel the myth that “Made in China” signifies poor quality. It’s time to embrace a new perspective. As business owners, innovators, and product designers, we understand the power of perception and its impact on our decisions. While it’s easy to fall into the trap of generalizations, it’s important to recognize that quality knows no borders.
Unleashing the Power of Global Manufacturing: Supporting Your Local Economy
Today, I want to address a common concern that many of our clients initially have: the perception that setting up manufacturing overseas means neglecting local businesses and industries. Let me assure you, my fellow innovators and product designers, that this is a misconception we need to
dispel.
Allow me to share some valuable insights into the interconnected nature of global manufacturing and how it can actually support your local economy. As the founder of China Connect Advisory, I’ve witnessed firsthand the transformative power of leveraging expertise and infrastructure in China to
propel local businesses forward.
First and foremost, let’s acknowledge that numerous industries simply cannot be competitively manufactured locally anymore. We’re not just talking about price considerations here, although that is always a crucial factor to ponder. The reality is that in certain sectors, such as electronics and high tech, expertise, infrastructure, and the quality of output have evolved to become paramount.
Over the years, these industries moved offshore, leaving a void in local infrastructure and specialized labor forces. Attempting to manufacture locally under these circumstances often leads to compromised cost–efficiency and quality, hindering your business’s growth potential. By embracing global manufacturing, you gain access to established supply chains, cutting–edge technology, and a skilled workforce, all of which contribute to superior quality and cost competitiveness.
Now, I know what you might be thinking – “But Dennis, if I produce overseas, am I truly supporting my local economy?” My answer is a resounding yes! Your business’s success, regardless of where your physical product is manufactured, reverberates through your local economy in multifaceted
ways.
Consider the various aspects of your operations that are undeniably local: your leased office spaces, warehousing facilities, and the employment of sales, administrative, and marketing staff. Even if you choose to subcontract certain tasks to other local businesses, the ripple effect remains. Your thriving enterprise bolsters the economy by creating jobs, stimulating consumer spending, and fostering an ecosystem of collaboration and innovation.
On the flip side, if your business cannot compete globally and ultimately fades away, it adversely affects your local economy. Your sustained success is an indispensable cog in the wheel of prosperity for both your enterprise and the surrounding community. It is time to embrace a more holistic
perspective, breaking free from the confines of isolated thinking.
By strategically outsourcing certain aspects of your business, you unlock the potential to compete as a cohesive whole. This allows you to focus on your core competencies while simultaneously supporting your local industry across a multitude of functions. Whether it’s handling the tech aspects
in–house or collaborating with local vendors for web development and software solutions, you contribute to a thriving ecosystem of interconnected businesses.
In conclusion, my fellow business owners, let us recognize that global manufacturing is not a detractor but an enabler of local economic growth. It is through these symbiotic relationships that we can unleash the full potential of our businesses, drive innovation, and ultimately contribute to the
prosperity of our communities.