Businesses have to focus on maintaining their sustainability and profitability to survive in the market. One of the ways to address both of these important factors is through low-cost country sourcing. There are significant advantages of sourcing merchandise from Third World countries. Some studies indicate that there is a cost differentiation of nearly 30% when you procure goods from low-cost countries compared to Western countries.
Global sourcing has now become very important as it offers long-term and short-term benefits to companies. If you want to improve your profit margin significantly, you should source goods from low-cost countries. To understand it better, look at some advantages of low-cost sourcing for your business.
The Production Cost is Cheaper
One of the important reasons why many businesses go for low-cost country sourcing is to gain a cost advantage on their goods. Many low-cost countries like China, India, Vietnam, and others have huge capacities, wherein certain types of products are mass-produced. As goods are mass-produced, the economy of scales comes into operation and the product can be bought at a very cheap price. Furthermore, the labour cost in these countries is significantly lower than the developed countries. This allows the companies to put more money into R&D without affecting the quality of work.
Highly Skilled Workforce
The second big advantage of low-cost countries is their highly skilled workforce. The workforce in these countries is highly skilled, and they know about the latest technological advancement and production techniques. They also know how to use the latest methods in their operations. Such a highly skilled workforce guarantees that the products and services that you procure from these countries match global quality standards.
More Focus on Product Development
If your company is manufacturing goods, R&D can sometimes get neglected. However, if you have adopted low-cost country sourcing, you get more flexibility and freedom to create new and better products and services. Additionally, the huge amount of cost you save due to outsourcing can be ploughed back into R&D or business expansion.
High-Quality of Products
Businesses looking for high-quality products source their goods from those suppliers who have the high-tech infrastructure and the latest technology. If the product passes through all the quality tests, the businesses in the developed countries can buy very high-quality goods at significantly lower costs. Therefore, find a highly reputable supplier who has experience and competence in supplying goods that you require and is comparable to the best in the market.
Faster Business Growth
If you rely on low-cost country sourcing, it will help in significant financial earnings. The financial benefits are much more if you invest in a low-cost country compared to developed markets. Therefore, for guaranteed growth, sourcing from low-cost countries should be a priority for your business.
When the entire responsibility of production shifts to a third-world country, the risk associated with it is also passed on to them. In this way, you can focus your attention on running your business profitably rather than continuously mitigating production-related risks.