Outsourcing Assembly: How to Use a China Assembly Service in Your Supply Chain Strategy
Despite recent uncertainty in the supply chain, China continues to serve as the second-largest exporter to the United States. For many companies, a partnership with a Chinese assembly service is essential for solidifying their full business potential.
Decision-makers around the world understand the importance of operating in a calculated and gradual way in China. With this in mind, how would you launch and scale your China assembly operations effectively?
Keep reading to learn more about outsourcing assembly and how to use a China assembly service.
Getting Off to a Good Start
Outsourcing production to China can serve as a vital part of your supply chain strategy. However, there are caveats involved when initiating business with China assembly services.
For instance, out-of-country interests typically have a modest local presence. They’re also unfamiliar with the nation’s bureaucracy and legal system.
Also, these firms must manage cultural barriers in the local business environment. Often, these companies make mistakes due to their lack of experience.
You can overcome these kinds of issues by working with a professional service provider that operates in the China market. You’ll find that this kind of consultant is aware of all local regulations. More importantly, they’ll help you operate efficiently from day one.
Managing Import Regulations
Companies often face another dilemma when starting business negotiations with OEM manufacturers in China. They face problems dealing with the local currency.
For some companies, doing business in China doesn’t justify the investment in establishing a local branch. On the other hand, some China service providers don’t want to accept payments in foreign currency. Some companies may not even have this capability.
By working with a China assembly service provider, however, you can enlist a consultant to perform these transactions on your behalf.
Finding a Stable Supplier in Uncertain Times
If ever an event represented uncertain times, the pandemic is definitive of this circumstance. During this and other market disruptions, companies must make operational adjustments. These adjustments result in a loss of time and risk-taking that are inherent to change.
Still, you can remain stable and flexible if you manage change properly. By outsourcing contract manufacturing in China, you can adjust to changes quickly.
Your business may have a sensitivity to these kinds of situations. If so, the benefits of working with a partner that always has their feet on the ground in China are obvious.
The Freedom to Focus On Growth
You need an efficient and economical solution for managing your business activities in China. With it, your sales managers can focus on finding more business.
Meanwhile, your company representatives can focus on other important business development functions. For instance, they can work on building your customer pipeline.
Tasked with managing your overseas interests, your team members could find themselves overwhelmed with China’s bureaucratic and operational requirements. As a result, they can struggle to find time to sell your products and grow your company’s presence.
Reducing Costs With the Right Partner
In most cases, it’s faster to have your products assembled in China. This is the exact kind of advantage your company needs.
China assembly companies can provide customized production facilities suited to your needs. These facilities serve as a cost-effective and fast solution for OEM manufacturing.
They enable you to operate your outsourced manufacturing processes responsibly. Meanwhile, your firm will continue to enjoy the benefits of a production operation that runs more efficiently versus one on your native soil.
Let’s have a look at a few more benefits of outsourcing product assembly in China.
Reduced Labor Costs
China has remarkably low labor costs. In China, the average salary is nearly half of that of salaries in the United States. This circumstance is a huge benefit for labor-intensive industries.
Outsourcing product assembly in China can help you to lower labor costs due to high turnover. You can also further lower labor costs by outsourcing to developing cities in China.
Reduced Product Costs
China is the home of the largest manufacturing sector in the world. In a single year, China produced nearly 30% of global manufacturing output. Furthermore, export growth in China at times matches the growth of all other export activities in the world.
What that means for your business is that there’s no need to import the many goods and raw materials needed for production. In turn, you can avoid import tariffs.
The Chinese manufacturing ecosystem is engineered to build products at lower costs. Chinese factories can easily access components, affordable labor, a strong technical workforce, and assembly suppliers.
More Efficient Use of Company Resources
China is rich in talent and resources. The country has a labor pool capable of handling your in-country interest in several areas, including:
• Accounting
• Customer service
• Information technology
• Manufacturing
You can save time and have more of it to concentrate on your business by outsourcing.
Meanwhile, your in-house team can focus on the core competencies of your company, such as team building, leadership, and product development. You can spare your company from using their talents wastefully on paperwork and other mundane tasks related to your manufacturing process.
Innovation You Can Count On
China ranks near the top of the global list of innovation among countries. It even outpaces countries like India, Japan, and the Philippines.
Premier China assembly services are on par with the best companies in the world. They can compete with companies in the US, Switzerland, and Sweden when it comes to innovation. In January 2022 alone, Chinese companies exported nearly $250 billion in goods.
Chinese companies have vast research potential. They can give you fast and easy access to technology. Moreover, their access to research can give you a considerable edge over your competitors in other countries.
A Legal Environment for Success
Each year, a growing number of companies import Chinese goods. The Chinese government welcomes foreign companies interested in assembly services. The country amends its outsourcing laws continually for this reason.
China works toward improving its infrastructure to ensure efficient outsourcing. At times, the country has spent ten times more on infrastructure development compared to the United States.
Yet, China’s improvements go beyond bridges and railways. The company has also developed its digital infrastructure, supporting the rapid transfer of vital business information.
Like any other industry, however, there are both good and bad elements in the Chinese market.
Challenges of Outsourcing China Assembly Service
If you choose the wrong service provider, you can find they deliver low-quality products. Often, these products won’t meet international standards.
Despite their affordable cost, they don’t offer much value. You must remain vigilant to ensure that your Chinese assembly service produces high-quality products.
You can achieve this goal by conducting regular quality control audits. Alternatively, you can hire a knowledgeable partner in China to conduct regular inspections on your behalf.
IP Protection
In addition, intellectual property rights vary around the world. With this in mind, you must research China’s copyright and trademark system. This task is especially important when a service provider has access to your designs, products, and other trade secrets.
The Chinese government and many national outsourcing companies have strict IP protection measures. Still, a service provider could make copies of your products and sell them at lower prices.
It’s prudent to draft non-disclosure, non-use, and non-circumvention agreements when working with product assembly services in China. These types of agreements will offer more protection compared to a standard non-disclosure agreement.
Verifying Assembly Services
When searching for a China assembly service, you’ll eventually develop a shortlist of potential providers. Before making a selection, however, it’s critical to verify their credentials. By verifying the credentials of a service provider, you can ensure they can meet your outsourcing needs.
For instance, you must check whether a supplier can produce goods according to your requirements. You must also investigate whether they can ramp up production if you choose to scale up your operation.
You must cross-check any information a potential supplier provides. For example, you may need to verify their:
• Business license
• Customs registration certificate
• International trade certificate
• VAT invoices
A reliable consultant can help you verify that any such documents presented by a potential assembly service are genuine.
Gaining an Advantage With Chinese Assembly
If you want to launch an efficient operation in China, it’s in your best interests to partner with a local sourcing agent. An experienced consultant can help you to choose the right China assembly service. They’ll help you to avoid investing your money in the wrong provider.
An experienced consultant can also help you select a suitable city for outsourcing. They’ll also help you to source the legal guidance you need to successfully kick-start your China operation.
Expertise You Can Take To the Bank
A knowledgeable local consultant can help you in many areas. These areas could include:
• Accounting
• Logistics management
• Human resources
• Digital marketing
By partnering with the right consultant, you can lean on them for support in all aspects of your business. Meanwhile, you can remain focused on building sales and managing your native distribution channels.
Moving Forward With a China Assembly Service
Once you’ve selected a service provider, you must create an outsourcing agreement that defines the specifics of your arrangement. For instance, you might outsource product assembly in China.
In that case, the agreement should cover important details, like price per product, production value, and other important elements. You might also highlight terms for special services like just-in-time inventory management.
Your agreement might also cover minimum productivity, working hours, and KPI tracking. It should also specify ways to resolve disputes, dissolve your agreement, and other legal matters.
Most importantly, you must ensure that the meaning of your agreement doesn’t change when translated from one language to the other.
Defining Your Specifications
You must also clearly define your product specifications. This kind of clarity will help you avoid problems.
For example, you must explain exactly what you expect from your outsourcing partner. This explanation might include your product specifications.
You must list and explain even minute details. Furthermore, you must conduct regular inspections. They’ll ensure your service provider implements your instructions correctly.
Getting Your Team On Board
It’s a big decision to outsource your assembly to China. What’s just as important is getting your internal team on board with the change.
For example, you should explain why you decided to outsource assembly to China. You should also explain to every department how they’ll benefit from the transition.
In addition, you should clarify the roles and responsibilities of each team member. In this way, they’ll know how to manage their tasks related to your outsourcing operation.
Monitoring Service Provider Performance
It can prove challenging to monitor an outsourcing partner. However, this challenge becomes intensified when your base of operation is in another country.
It’s vital that your partner works productively. You must find a way to control absenteeism and distractions.
It’s helpful to use performance monitoring software. Companies of all sizes—from small startups to global conglomerates—use productivity management tools.
With this kind of resource, you can track the time that employees work. You can also manage employee performance based on real-time productivity reports. You can also use this kind of tool to assign projects and tasks to outsourced staff members.
Your Partner in Chinese Assembly Services
Now, you have a better understanding of how to use a China assembly service. What you need now is an experienced consultant with strong ties to the best service providers in the nation. Shield Works Mfg. can help.
We believe in building productive long-term manufacturing relationships. When we set out to deliver results, it happens.
Contact us today to learn more about securing your production interests in China.