Where to Manufacture Your Product: China? USA?

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Robots welding in a production line

 

Have an idea for a great new product? Where to manufacture it? Today it seems China is the answer. Before you choose China, which might be your best choice, compare manufacturing in the USA to manufacturing in China. According to a report titled 2016 Global manufacturing competitiveness index, China is the most competitive manufacturing nation but the United States is expected to take over the number one position from China by the end of the decade. The index ranks talent as the most critical driver of global manufacturing competitiveness, followed by cost competitiveness, productivity, and supplier network.

There are good reasons for manufacturing in the USA compared to China.

  • There is no language or cultural barrier.
  • Shipping is quicker and cheaper than shipping from China.
  • You don’t have to deal with customs and there is no duty.
  • It is easier to get legal recourse in case of conflicts.
  • There are more payment choices.
  • It is easier and cheaper to verify the manufacturer and product quality in-person.

Manufacturing and labor costs are substantially higher in the US than in China. And a poll by the Chicago Tribune this year found that Americans prefer low priced items to ‘Made in America.’

There are websites where you can find American manufacturers. Try Maker’s Row, a website that bills itself as the home of American manufacturing. Thomasnet lists over 700,000 suppliers in US and Canada. Check the M and A Expo Database for trade shows where you can find a US manufacturer.

When considering a Chinese manufacturer, keep these 3 points in mind: quality, price, and delivery time. There are pros and cons to choosing a Chinese manufacturer.

Pros:

  • The low cost is the number one reason to manufacture in China.
  • China has a huge business ecosystem. A network of organizations that includes suppliers, distributors, customers, competitors, and government agencies.
  • Manufacturers are willing to fill orders of almost any size.

The list of cons is longer but must be measured against the number one pro: price.

  • The language barrier and cultural differences can cause problems with communication.
  • The time and cost involved in shipping are a consideration.
  • You have to deal with customs.
  • You have little to no legal recourse if there is fraud or theft.
  • Goods made in China are perceived as low or poor quality.
  • The time and cost of travel to China make it hard to personally verify quality.

There are a number of websites to source Chinese manufacturers, Alibaba is probably the most well known. Also, try Global Sources andMade in China. Chinese manufacturers will be present at the Asia America trade show in Miami and the China Exhibition website list trade shows in China.

After you have decided whether you will manufacture offshore or in the USA there are things you must do to ensure you choose the right manufacturer.

  • Do an online search. Search companies by name. Check their online profiles and check their rating on different websites. For companies in the US, search for them on Ripoff Report and in the Better Business Bureau database.
  • Ask the manufacturer for references and call the references.
  • Choose a manufacturer with proven expertise in your product category.
  • Select a manufacturer large enough to complete your order, but not one who supplies such large customers that your order will be put on hold to fulfill the needs of larger customers.
  • Ask about quality control and how they ensure your product is manufactured to spec.
  • Get detailed product and packaging specifications
  • Ask about minimum orders.
  • Ask about their shipping process and if they have a partnership with a logistics company?

Once you have chosen your manufacturer, you need a contract. This is not something you can do yourself. You will need a lawyer well versed in this area of the law. When you speak to a lawyer, be clear on the ownership of mold/tooling and your need protect your intellectual property. If you don’t have your patents in place, now is the time to apply.

Creating a new product and bringing it to market is an exciting process. With due diligence, you could possibly be the next Bill Gates. Without due diligence, you will experience an expensive disappointment. Be a Bill Gates.

 

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