To reduce the production cost, most of the modern-day organizations consider sourcing as a viable strategy. This helps the companies to sell their products at a lower price, intriguing more consumers resulting in more sales. To increase profitability, the organizations are in search of innovative ways of cutting down costs. China is a preferred sourcing destination for most marketers as it is considered as one of the largest manufacturers with their doubled manufacturing capacity and ability to produce within a short period of time. But before you decide on sourcing products from China, you need to know both about the pros and cons of such a decision. The pros and cons of China sourcing are listed below:
Cheap Manual Labour:
Production of a product will definitely require manpower and so this serves to be the most important resource for any organization. Wages in China are significantly lower than any other country and this results in the production of more quantity of the product at a cheaper rate. You even get access to the cheap labour of the factory without even training them or enduring any kind of hardships of hiring them. Depending on the intensity of labour necessary for the production of the required product or services, the production cost reduces exponentially.
Higher Production Capability:
China based factories are capable of producing goods for the global economy. These factories are time-tested and capable of producing quality products at a massive rate.
Better Expansion and Diversification Opportunities:
Do you want to expand your business in the upcoming market? Then you can choose to sourcing products from China as this will provide you with the possibility to expand and diversify your product offerings and you may even get a chance to sell your products to international markets much easily. If you plan to build your own factory, acquire equipment and hire employees, this may seem to be a long process, whereas outsourcing production of a new product can allow you to get a catch of the market within less time. It may also help you to expand your global footprints. Diversification while manufacturing goods leads to improvement and growth in business.
Other than labour, manufacture of a good requires other elements also. Domestic manufacturing of some products can be extremely expensive. Startups and businesses that are new to the industry have minimal chances of competing with others and China eliminates the high rate of failure possible in domestic manufacturing. At minimum expenses, things continue to run smoothly as production efficiency in China is extremely high because of affordable labour costs and absence of other complications.
Low Quality Materials:
Quality of a product determines the reputation of your company. So being a businessman you need to see that the quality of the product of your company is maintained. If lower cost of manufacturing or having a check on the manufacturing cost decreases the quality of the product then such a plan of business should not be encouraged. Consumers check both the quality and the price of the product, so it is important to maintain the dignity and reputation of your business.
Speaking a common language is necessary to continue business operations. Most of the Chinese are not so proficient in English and this may lead to hindrance in business. A translator or effective bilingual speakers are the people who can help you in establishing the right platform between the two teams. To continue product sourcing from China you need to deal with these problems.
You may be well aware of the fact that products manufactured in China may appear impressive while looking at them. But being a businessman you should also test the quality of the product, as looks may impress the consumer for once, but the quality is capable of satisfying the consumer leading to more demand for the product. So to make sure that everything is up to the mark, you need to have an agent in China who will help you decide.
You should be very careful about copyrights, when you decide on China sourcing activities. A generalized lack of respect for international copyrights and designs in the market of China may harm the bottom line of a business, so you should pay attention to the copyright of the product to continue a hassle free business.
Takes a Long Time to Become Operational:
Involvement of long supply chains for product outsourcing to China and the starting of the process of manufacturing can be a lengthy process resulting in delay of the operation. Staff strike against management, shortage of energy, and other ongoing issues also affects the business which may not be a cause of problems in the domestic market. Because of high turnover rates managers need to be constantly trained.
Finding a Factory:
This is the first challenge faced by businessmen to select the right factory who is willing to manufacture the products. It is important to verify that the factory you are choosing agrees to your terms as they often deny to produce goods less in number, so you need to confirm before you commit.
The pros and cons of sourcing products from China need to be balanced effectively. You need to consider your options and take precautions accordingly, this can be the only way to run a stable manufacturing process. If your business can benefit from lower manufacturing costs, then China manufacturing can be considered as the best option to expand your business and earn more profits. But a proper quality of the product should also be maintained for a long run business. Certain financial advantages can be obtained but for future benefits, additional benefits need to be in place. Both the advantages and disadvantages of China sourcing are listed for your help. Having a minute look at the points will definitely help you to decide and select the right path for your business.