Pros and Cons of Doing Business in China (2022 Updated)

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Are you looking for the Pros and cons of doing business in China? You come to the right place.

China is the second largest economy in the world, and there’s been an increased inflow of products from China in most parts of the world. At the same time, there has been an increase in the number of local entrepreneurs outsourcing the mass production of their jewelry designs to China. But, is China the best place for you to produce your products in? Are there caveats in this international product production option?

While China was, for a long time, a highly recommended country for mass production of products to be used in the country, the volatility and political/ economic uncertainties that have rocked China the past few years have necessitated this discussion. Even though your competitors are producing their products in China, you have to get the full picture of the production process in the country. You’re in business to profit after all.

Pros

  • Low Cost of Manufacturing

There is no denying that the cost of production in China is significantly lower than what’s quoted in other parts of the country. And even when you factor in the cost of shipping and the duties charged, the costs are rather competitive and generally cheaper.

The low cost of manufacturing is a welcome relief to anyone in the production industry, with the low cost of production meaning better sales, most of the time. So, if the cost of production is the only thing that worries you about the production of your custom jewelry designs, please go the China way.

  • They Record Higher outputs and Higher Turnaround time

Want to mass produce those stainless steel rings to meet your ever growing retail and wholesale demand, get a manufacturing company in China. The Chinese manufacturers work well with large orders, and they also keep time which means a promised production time of 6 weeks is 6 actual weeks. China-based manufacturers boast aggressive and impressive turnaround times.

  • The Service Offered Is Better Than What You Get from Domestic Manufacturers

Most people who’re in the product manufacturing industry note that the services offered by China-based firms are better than the services offered by local companies.

So, while you might meet the factory’s high minimum requirement for the products you need to be manufactured, the company’s agent will most likely communicate with you, to get the project. Most domestic companies, especially the startups fail to meet the good-service scale if you were to create one.

Note that there are a few cases where you might be treated unfairly, but the rule of the thumb is that if you treat the Chinese fairly and respectfully, they’ll accord you the same level of respect.

  • Superior Duplication Capabilities

While not encouraging duplication of someone else’s designs, if you’re looking for a company to reproduce hundreds of thousands of pieces of jewelry, you should consider a manufacturer in China. Chinese companies have the equipment and technologies necessary for the production of duplicate copies, and some of the companies are so good, you wouldn’t tell the difference.

Cons

  • It’s not easy finding the right factory

Even when using sites such as Alibaba to find a manufacturer in China, it’s not quite easy finding the right manufacturer overseas.

And even if you find a long list of companies you could work with, choosing one over the other when they all look like they’re selling the same service, is hard.

If, however, you must find a manufacturing company from China, you can find the best company by attending the right tradeshows. And this is easy because Google will guide you on the tradeshows you should consider attending. You can also use Alibaba and Maker’s Row.

  • Communication Breakdown/ Language Barrier

Do you know Chinese? Can you communicate well and effectively in Chinese to land the best production rates? Because, whether you like it or not, you must be understood for the best product quality, for a few mistakes, and even a lower cost of production. If you’re lucky, you might find a Chinese who understands and speaks English, but they might not communicate too well as they try to bridge the gap between yourself and the designers or technicians.

At the same time, be careful about the words you use. The Chinese are known for their precision, taking everything at face value. If you’re unsure of the right word, use photos to illustrate what you are saying. If you’re not visiting the factory in person, you should use webcams to communicate.

Also, you must confirm and approve every step of production from the start.

  • High Minimum Product Requirements

As mentioned above, one of the biggest drawbacks of manufacturing in China, especially when you are a small manufacturer is the high minimum. The Chinese factories have a higher minimum than what’s asked of you by the domestic manufacturers.

The reason for this is that the factories work with very low-profit margins, which leaves them without the option of accommodating one-off projects.

So, if the Chinese companies have minimum requirements you’re unable to accommodate, you should consider another manufacturer in the US or some other country.

  • Stigma

Can we all agree that consumers have a rather low opinion of products that are made in China? What about the fact that these people (and you and I) are willing to pay for a China-made product if it costs less?

It, therefore, means that if you’re going to sell your unique jewelry designs which have been manufactured in China, you should expect some negative feedback. Just ignore them, and ensure that your products are of the highest quality. You will go a long way with a few satisfied customers.

  • Shipping

The other issue associated with doing business or manufacturing products in China is the shipping time and the cost. With most of the factories located in remote parts of China, the cost of shipping will be significantly high. You might have to confirm the landing cost of the products, per piece to determine whether manufacturing overseas is affordable or not.

Then there is the fact that shipping will take at least 30 days (at least) by sea. Shipping by air is too expensive, but there are cases where shipping by air is cheaper than the 30-day wait for sea shipments. So, you’d have to choose the option that works best for you.

  • The Quality of Products is Sometimes Questionable

If you’re unlucky, you might find that your products’ quality is lower than what you ask for. The most common reason for this is assuming the manufacturer will do everything as you ask. So, if you are making sophisticated products, you should consider being present in every step. Alternatively, choose a domestic company because you will have better control over the process.

  • Protectionism

If planning to do business in China, first know that the country favors the domestic businesses over the foreign-owned businesses.

 

Remember that depending on your business, some of the pros or cons above could weigh heavily on your decision. It’s also important to note that the manufacturing costs keep rising and you might face some administrative challenges. Also, there’s no transparency.

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