A Foolproof Plan for the Overseas Manufacturing of your Product

Overseas manufacturing refers to relocating the production or assembly of goods to another country. Companies usually do this because labor costs in the other country are low. Overseas manufacturing may also occur because raw materials in the other country are lesser along with skilled labor. Overseas sourcing and manufacturing are not just for the big guys anymore. Every year more small and medium sized companies are utilizing overseas manufacturing or product sourcing. This can help business owners save two of the most valuable resources they have: money and time.

As the ability to consistently mass produce and meet demand is crucial to a company’s success, Overseas manufacturing is less expensive, allows for goods to be produced in very large volumes. Volume ensures that businesses and companies are able to meet their market needs every time.

For most small businesses, the trick to manufacturing overseas is to find a way to contract the job or go into a partnership with an overseas manufacturer without losing control of your product. Here are few important things business owners can do while opting for overseas manufacturing-

Ask for references: The first step is to ask each potential manufacturer if they have previous experience with similar foreign companies. Then ask if they would be willing to connect you with a few of their clients to share their experiences. If a manufacturer can’t or won’t provide any solid contacts or references, you may want to pass on working with them.

Ensure all parts of the product are feasible: If your design has a lot of unique specifications, be sure to find your supplier quickly and get started working through these customizations. Once you have a prototype you’re happy with, you can finally start ordering the tools you’ll need to start production.

Use a good manufacturing contract: In particular, use a contract that details your product’s quality requirements and clearly sets out how disputes will be resolved. For what constitutes a good overseas manufacturing contract such as OEM, CM and ODM.

Setting up or buying a facility or entering into a joint venture: Setting up or buying your own manufacturing facilities overseas can be extremely expensive. Be aware that you’ll need to have a large volume of business to make a return on your investment. Running an overseas factory as a joint venture with a local company can reduce the risk to your business.

Communicate clearly: This applies even in English, but it’s hyper-important when you’re dealing with companies based in non-English-speaking countries. Avoid long words or unnecessary jargon, especially things that might trip up machine translation.

Whether you need small, complex components, simple, oversize parts, or something in between, offshore manufacturers deliver products that match your specifications with fast turnarounds and at a fraction of the cost of domestic manufacturing. Overseas sourcing allows manufacturers to compete with less expensive imports. Manufacturing countries such as China often have a larger number of specialized suppliers, making it easier for you to find the exact equipment and state-of-the-art technology you require, all while saving money.

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What New Rules Reopened Chinese Factories Need to Follow

Early in the outbreak of Coronavirus, China imposed tough travel restrictions and factory suspensions to curb the spread of the virus, squeezing labor supplies and sending exporters scrambling to fulfill orders. Now, the reverse is happening – overseas orders are being scrapped as the pandemic ravages the economies of China’s trading partners.

China’s leadership is calling it a soft opening of their economy. Chinese factories are opening slowly. Distributing masks and nagging employees to wash their hands count among the more uncertain methods for ensuring employee safety, experts say. But these are largely the methods that Chinese companies have been relying on as they have restarted production. The companies’ plans rely on a steady supply of masks, gloves, thermometers and tests that is likely to strain budgets and manufacturers’ ability to keep up. Social distancing will be built in, with people divided by barriers and kept apart from colleagues and customers

Nationwide, workers are required to wear masks on the job and have their temperatures taken at the door. Big tech companies such as Sony and Apple have reopened their production facilities in China. But the full-fledged production is yet to come. State-dominated industries such as steel are close to normal production but automakers and other private sector manufacturers say they are operating below normal levels. They say the pace of their recovery depends on how quickly their supply chains can be restored.

After weeks of empty streets and shuttered shops, signs of life are emerging along the manufacturing belt in the country’s coastal regions. The initial signs are good; however, Chinese authorities have imposed new set of rules and regulations for opening up the factories in the mainland China. Earlier this month, at a top-level political meeting, China’s leader Xi Jinping called for an all-out “people’s war” against the deadly virus. But at the same meeting, he also urged officials to continue to “reach goals and tasks of economic and social development this year.”

Now the government is advising local officials to balance seemingly contradictory mandates: use all methods possible to limit the further spread of a deadly new virus while meeting annual economic growth targets.

According to Forbes, managers and entrepreneurs complain about unequal and conflicting regulations across the country. While Beijing has stressed that it wants to restart the economy, pledging tax cuts and other forms of aid to industries harmed by COVID-19, local regulations are preventing factories from reopening. Thus companies find themselves stuck between the necessity of keeping their employees safe and staying in business.

China’s economy was likely running at about 50% to 60% capacity in the week to Feb. 21, according to a Bloomberg Economics report. Official statistics showed that more than 70% of plants in provinces such as Shandong and Jiangsu have now restarted, with the rate above 90% in Zhejiang, though most are running below capacity with many workers still missing. The final impact on industries will depend largely on companies’ capability to source alternative suppliers and the progress of virus containment worldwide

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