Like many entrepreneurs, you may start out wanting to manufacture your product in the US. But due to cost and other factors, that may not be practical.
China is a good option for its low production costs and manufacturing expertise. It offers several advantages:
- a large workforce
- factories clustered in geographic areas that specialize in different industries
- a good track record for manufacturing all kinds of products
If you decide to manufacture in China, there are several things you need to keep in mind—and one essential that will prevent a lot of headaches when working with factories halfway around the world.
Four Considerations for Manufacturing Overseas
Time and money, relationships and communication—these are the four things you’ll need to think about when you decide to outsource your product overseas.
Timelines. It may take 12 weeks to manufacture your product in China. Then the product spends 4 to 6 weeks on a boat and maybe 2 weeks at a port. When you finally take delivery, you’ll need to unbox your product and possibly reintegrate it with other pieces. You have to stay on top of these timelines to fulfill your orders on time.
Cost and pricing. Taking your product to a Chinese manufacturer means negotiating costs to come in at a good price point for your product and market. But after you sign the agreement is not the time to go on autopilot. As I explain below, you need to stay alert for issues along the line that affect pricing.
Relationships. When you move to a new town, you have to find a new doctor, a new dentist, a new accountant. It takes time to find people you trust and establish those relationships. This also applies to finding and working with a factory on the other side of the world to build and deliver your product.
Communication. If you don’t clearly communicate your design and specs, the manufacturer will be forced to guess. This introduces mistakes and affects product quality. It’s not just a matter of a language barrier, either. The more complicated your product is to produce, the more accurately you have to set out your expectations—with any manufacturer.
Your Number One Essential: A Good Liaison
OK, you’ve decided to make the leap! Your number one priority now is to find the best manufacturing liaison you possibly can.
A liaison is a third party, usually a person within a company that specializes in production management. Your liaison is responsible for quality control and consistency from order to order, serving as part project manager, part advocate, and part engineer-on-the-ground.
Look for a liaison with the most experience in the market or sector you’re trying to manufacture in. A good liaison will:
- Help you find the right factory for the right job. Your product may have different components made of different types of materials (glass, plastic, metal). One manufacturer usually can’t do it all, and different factories are needed for different parts.
- Vet unknown factories and check their business license to see if they’re actually a manufacturer, and check their references: What companies have they worked with or produced for?
- Track your orders and hand-walk your product through the different factories you’re outsourcing to, to deliver a finished product.
Why Pay a Middleman?
A lot of times inventors and business get caught up in saving money any way they can to bring a new product to market. So they think, “Why shouldn’t I do everything myself and pocket that money? I’d be ahead of the game, right?”
Hiring the right liaison will mean fewer issues with quality, better oversight and more security. They will protect your designs from being misappropriated, see them through production and in the end deliver a finished product back to you.
A liaison also stays on top of current issues like changing shipping conditions and tariffs. In 2018–2019, the trade dispute between the US and China meant tariffs of 10–25% on everything from clothing to agricultural machinery. If you’re not paying attention to things like this, your profitability can go south pretty fast.
A liaison will understand the manufacturing process to the extent they can offer engineering support. You stand a better chance of getting what you order and meeting market demand with a liaison who:
- Can communicate your expectations on allowable tolerances and critical areas of your product.
- Follows up regularly. Your first run may come out fine, but every subsequent order needs to be checked. I’ve heard hundreds of times that a manufacturer didn’t even ask—they just made “tweaks” to the design. When that happens, there’s a risk of recalls and expensive do-overs.
- Helps you continually improve your product. Most of the time, your product is going to have to change with the market and you’ll need to be evolving it.
Engineering and Quality Control
When Alotech serves as the manufacturing liaison for our clients we pay special attention to cost outs—the total cost of a product as designed. Many times, we find that products are overengineered. We then help clients make adjustments to bring about cost savings. This in turn helps bring down ultimate pricing for the product, yet still meet the customer’s needs and specifications.
Our most valuable lesson from our years of manufacturing in China has been in the area of quality control. Early on, we realized that it was critical to do incoming inspection on all orders—100%. So we developed our own inspection criteria to make sure parts met spec.
We found that some manufacturers weren’t inspecting parts at all. One of our clients had a 50% scrap rate. We let this particular manufacturer know about the issue and discovered they didn’t even realize they were having a problem. We ended up developing our own vision inspection system and sending it over to China. They still inspect parts with it today.
When you’re just starting out, being able draw on the trusted relationships and experience of a liaison will give you a lot of support. But in the end, it’s all about communication. How you communicate your needs to Chinese manufacturers affects your product, the process and your ultimate experience.
Alotech provides contract manufacturing services efficiently and ethically to small business. In addition to remanufacturing, prototyping, and product development services, we make creative investments in companies. We strive for success so you can too: 919-774-1297