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Contract Manufacturing in China: 5 Ways To Mitigate Costs

For the past decades, manufacturing in China was a rather inexpensive process. Many overseas companies have outsourced their production to China.

But now, China has hiked up their production costs because of major and minor changes in its policies and regulations.

Overseas businesses should keep costs low to remain competitive in the market. That’s why we’ve collected this list of five ways for you to reduce your costs by using contract manufacturing in China. Let’s get started!

Costs Are Rising, But…

Despite these headwinds of rising costs, China’s manufacturing future remains bright and you shouldn’t miss out on the benefits.

While the country is losing its edge in some labor-intensive sectors, it is gaining strength by building more modern infrastructures and hiring more talents at home and abroad.

A quick look around Shenzhen tells you this is a different type of China. It’s a place that doesn’t need to be cheaper than anywhere else because it’s better than anywhere else. In this factory city, no one is thinking about cutting corners and doing things cheaply to compete with other countries. Instead, everyone is thinking about how to innovate and be more productive than any other country in the world.

Manufacturing costs may be higher, but you can get better quality products and customized services and support. In this regard, you can save your company a lot of money, time, and hassle.

Conduct A Manufacturing Cost Estimation

There are many things that you should be aware of before outsourcing manufacturing operations in China, conducting A manufacturing cost estimation is the main one.

As you know, overspending and underspending can lead to confusion, lower confidence, and many other negative outcomes. The right manufacturing cost estimation is essential to optimizing the manufacturing process and building value-driven product, which is capable of competing in the global market.

So it’s particularly important to figure out manufacturing costs associated with raw materials, product units, quality control inspection and shipment.

Use Design From The Contract Manufacturer

When it comes to industrial design, you will probably have a hard time.

As you may not be a design expert and you have no idea how to use CAD and build a prototype, and more importantly, you can’t start learning design from the scratch. You know your product design needs to be done by someone who has the skill set required for this task. So, you may want to hire an in-house designer to achieve a better appearance result. However, it may not be economically viable for small-business owners.

To cut costs, many businessmen would look for freelancers to help with their product design. But the problem is how to guarantee the result when your project is complex. You will end up in endless chats and files without getting things done.

You can count on your contract company which has a team of engineers and industrial designers working together for a certain project. They will work closely with you to create a well-designed prototype that can be used as a final product or can be modified to suit other requirements.

And the cost of product design is negligible comparing the production costs, estimated at around 5% of total expenses in your project.

Substitute Raw Materials

Don’t make the mistake of relying on the same raw materials for your products throughout the business’ life cycle.

That’s because raw materials are influenced by many factors that change over time, which can significantly impact your total costs and production deadline.

As a business grows, you need to consider producing the same or similar product with alternative raw materials, which are more economically sustainable for your business.

For instance, consider ways you may be able to recycle materials into new products or use less expensive substitute materials. These small changes can drastically help you reduce manufacturing costs.

However, this could be risky if you don’t plan and make the appropriate changes. So, make sure you know what materials are best suited for your product so that your goods are always meeting industry standards and customer expectations.

Conduct Quality Inspection

Maybe you’ve read a few stories about how an overseas business has reduced its costs by cutting down on quality inspection.

However, it’s not a good idea especially when you are running a big business and want to hold the company in long term. Using quality control offers you peace of mind.

That’s because when customers receive your product which is of low quality and defective, they will complain online and never come back to you again. You will lose your reputation and profits.

If you want to reduce costs but still need to check if your product meets your expectations, you can work with a third-party quality inspection company.

By hiring an experienced quality inspector to conduct regular checks throughout production, you can be sure that your products are safe for consumption.

Get Started with Contract Manufacturing Today

Using contract manufacturing in China is a smart move for your company, which helps to save costs and time. So you can focus on expanding your business.

When your company needs contract manufacturing services, come to Shield Works. Our experienced team helps to keep your project moving smoothly and efficiently. With our British management background and long-term manufacturing experience, we are so sure of our proven process and expertise we take the responsibility of protecting you from all manufacturing defects.  Contact us to diss your project today!