What About Rising Costs in Manufacturing?

Because of newer labor laws, increased environmental protection standards and reductions of export tax reimbursement, many factories and some entire industries are leaving the Chinese coast and moving inland or even outside of China. Moreover, many factories on the Chinese mainland are facing intense cost pressures and some industries have already or are planning to make a move into alternative production bases.

 

There are indeed some opportunities in emerging countries; however, it’s crucial to have adequate information before moving your manufacturing base somewhere untested and unknown. Beyond viewing the initial bottom-line costs, factors such as level of quality, manufacturing capacity, technological capabilities, local support and secondary factories (ie: components, packaging), specific governmental fees and tariffs, as well as transportation and infrastructure limitations must be assessed.

 

Research and map out your import strategy – do your homework. Visit the plant first and talk extensively with foreign companies that are already established in a new country. Alternatively, many companies find that working with a qualified sourcing and import company in the US that has already done the work establishing relationships with manufacturers in emerging markets can streamline the entire process.

 

The bottom line is that a challenge-free market does not exist. Every manufacturing base has its own share of deficiencies – from workforce shortages and price increases all the way to corrupt and overly cumbersome governments. The key is to position yourself in a situation that is most beneficial for the long term goals of your company and work within a network of people that you trust and believe will do the best job for you long term.

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