Insight

How to know if outsourcing to China is right for your company

Business First of Columbus - January 12, 2007

by Judy Huang

For Business First

Does your product have a Chinese factory in its future?
Not all products are optimal candidates for overseas sourcing. The follow list of product characteristics can help you figure out if you should run, not walk, to the best China sourcing expert in your industry.

The good candidate list

Look for products that include these characteristics. The greater the number of preferred characteristics, the more likely your profitability expectations will be met:

High labor content or use of raw materials.

Using the abundant labor force in China obviously helps reduce production overhead. Overseas sourcing can allow manufacturers to train and focus their U.S.-based employees on the more sophisticated skills required by lean manufacturing best practices.
Also, production processes that involve stainless steel and aluminum can benefit from easy access to the raw materials. The abundance and availability of raw materials in China can give an opportunity to hedge purchase costs.

Secondary operations that add high value to your products at a relatively low cost.

Operations such as assembly, surface plating and chrome plating that add high value to your products at a relatively low cost are another hallmark of a good sourcing candidate for Chinese factories. Again, these processes take advantage of the skilled, low-cost Chinese labor force. Increasingly sophisticated technologies in Chinese factories mean you can gain even more value through these secondary processes.

Low cube or low weight.

Cubic space in a container or a warehouse is expensive real estate. An increase in the cube or weight of a product being shipped or warehoused drives up the logistics cost. Products with a low cube or low weight offer shipping and handling cost advantages.

High volume or fast-selling products

In any production setting, manufacturing a lot of the same product and selling a lot of the same product in a short period of time to one customer drives profits up and costs down. This is even more so with Chinese factories, in part, because Chinese business people are more open to negotiations with their clients.

Stability of production models and infrequent engineering changes.

Proven, mature products where your company has a strong production track record are worth considering. You know the pros and cons of their production well and have few modifications so it will be easier to communicate your expectations to the overseas factory.
Outsourcing the production of these tried and true products allows your stateside talent to focus on the new additions to your product line.

889 Global Solutions is not a stocking distributor and does not supply small quantities.

We source quality fasteners, stampings, wire forms, castings, plastic parts and virtually any component or assembly.

100% quality manufacturing.
All facilities are quality certified.
We guarantee that our products meet your supplied specifications
Extremely competitive pricing
Delivery to your port or front door
12 week lead times
We handle all paperwork
Partial container orders
Flexible payment options
Unique tooling options
Full range of packaging options from bulk to retail ready
Complete testing services available