Before we begin, let us first discuss why it is important to manufacture a product in China. It is no doubt, China is one of the greatest countries in the world with most products manufactured by them, successfully sold and exported globally.
China has a low production cost, which means, you can lessen the production cost of your production easily and gain more profit out of it and would also not affect your number of products. Besides, China has such skilled laborers and manufacturers that produce a bulk quantity of orders in less time. This means it would also save you energy, time, and money.
For anybody who intends to initiate a startup business, should opt for China as their sole country of production to sell the products around the globe. In this blog, we will discuss and explain in detail how to manufacture a product in China and what are the necessary points that should be taken under consideration while you set up your business on how to manufacture a product in China.
The Chinese Economy flourishes to be the manufacturing powerhouse and Chinese products are everywhere around the globe. The majority of products seen in the market have their tags, stickers, banners, labels, and advertisements labeled as “Made in China”. Because of this, it is crystal clear that the consumers might wonder, “Why and How to Manufacture a Product in China?”
One may think that this hype of cheap Chinese products around the World is due to the cheap labor rates in China that bring down the production cost but wait, there is more to that and here we assess each of these significant factors.
1. Bulk Production and Orders in Short Period
Bulk production is actually the major factor evident in the boom of Chinese products. They manufacture products in bulk which means that the raw materials essential for the production of that specific product are going to cost the Chinese manufacturers at a cheaper rate than those manufacturers with minimal orders.
Cheap material, cheap labor ultimately cheaper products. Chinese have excelled in production machinery and their efficiency so drastically over the last decade that now they are capable of bulk production within less time keeping quality up to the standards of all manufactures in the World. They have such big factories capable of producing mass products in a short time.
The best tagline that represents products manufactured by China is “HIGH OUTPUT, LESS TIME” and it is the best answer to the query “Why to Manufacture a Product in China?”
2. Reliable and Hardworking Manufacturers in China
A person willing to manufacture a product in China must be familiar with the work ethics of the product manufacturing companies from their CEO to the lowest-paid employee in the hierarchy. Let’s be clear that in manufacturing giant Chinese companies, employees from the CEO down to the lowest-paid worker consider that peace and loyalty are the two most important work ethics and should be maintained avoiding any sort of confrontation.
They consider disagreeing in a meeting with their CEO’s or even colleague’s opinion is out of the question. This way they are able to focus on their work or task and complete the assignments well in time keeping the quality standards in mind. Chinese workers know that the only way to succeed is through hard work and they follow the “996” rule which is working from 9 am to 9 pm for 6 days a week.
3. Work Permit Legality
Employers willing to have a foreigner as workers in their factories must comply with local laws and rules regarding the hiring of foreign staff which is pretty much simple.
The Chinese government knows that hiring more workers is necessary and fruitful for their economy so, keeping this in view they have developed an online approval portal for the workers, relaxation in terms and conditions, and have improved quality of service and facilities for all the workers applying form various parts of the world.
The above-stated changes tend more and more workers to get a work permit in China as compared to other countries where applying and approval process is tedious and stressful sometimes.
4. Production Capabilities
Production capability is directly linked to Minimum Order Quantity (MOQ). In China, most manufacturers go for high MOQ to cuts the production cost.
The production capability of China is evident from the fact that China manufactures similar products of all qualities ranging from ones with cheap material to the ones with the best raw materials used in them. The product range that China manufactures is countless and is always in excess for bulk orders.
Chapter 2: Why is manufacturing in China so cheap?
1. Production Cost
Mostly, people think products are cheaper in China because of cheap labor but labor cost is only one part of a product’s total cost. So, what’s the reason for cheaper products being manufactured in China? If one digs deep, he or she will come to know that actually, it is the material’s cheap cost that is needed to manufacture the product.
Because of the high volume of these raw materials and other utilities required for the manufacturing of products ordered by the Chinese companies they get it at a much cheaper rate.
One thing more than Chinese companies do not provide any medical or health allowance and insurances to the workers working in their factories, which help them to offset this cost too as compared to other manufacturing companies around the world.
2. Taxes and Duties
Value-added tax (VAT) is the system utilized by China for taxation. It is the tax applied on “value-added” to the product at each and step of its manufacturing and production. This rate is generally 17% or 13 % for specific products. The government gives Chinese companies some VAT refunding if the company exports products. Imports to China are charged VAT but other countries that don’t charge VAT do not have a VAT to charge Chinese imports.
3. Competitive Currency Practices
China’s currency policy is basically to halt or limit the appreciation of their currency (RMB), against the USA dollar and other currencies used in the world. This tends the RMB to undervalue as compared to other currencies and if the RMB is undervalued this means it is an indirect export subsidy which drastically lowers the cost of Chinese products imported into the different countries of the World. In light of this company, owners are attracted to buy parts, components, and various products made in China.
4. Low Labor Cost and Wages
A few years ago, cheap labor was considered the primary factor for cheap Chinese product manufacturing but this has changed a lot recently. In 2016, Chinese labor cost was about 40 % less as compared to the USA which made the laborers protest and the government increased the wages last the year.
Still, the labor cost as compared to the USA is 4% less in China but workers are satisfied with their wages and working tirelessly for the betterment of their country’s economy.
5. Business Ecosystem
One cannot afford to miss the spectacular rise of China’s business ecosystem. The stride of alterations in the business ecosystem of China is racing under the influence and effect of advances in digital media, globalization, and focus on innovation. In the new norms of China, only those manufacturers and companies will excel and progress to a better future who are innovative and creative.
China has jumped out of the traditional system of marketing known as “supply-trade-marketing” and has now introduced a system multiplying its enterprise value by trading across borders with partner enterprises value mining and innovation.
Chapter 3: What are the Types of Products you can Manufacture in China?
1. Clothing and Fashion Accessories
According to research, female consumers are more willing to spend on their outfits than on another product. This is a well-known fact to Chinese manufacturers and they produce clothing and fashion accessories in bulk. Few major companies that manufacture such products are Guangzhou Yummylife Jewelry Limited, Rudong Knit Fashion Accessories Co. Ltd., And a lot of other well-known companies and brands.
2. Tech Accessories and Gadgets
Chinese gadgets and tech accessories are the cheapest and affordable replacement of many gadgets produced by many famous brands. The presumption about Chinese gadgets and products that they are not of best quality is recently changed by many Chinese brands as they are producing excellent products which are on par with or even better than foreign big names. Some products which are really making their hold in international markets include:
Fun Gadgets to Gift
Makeup and Cosmetics
China is one of the world’s largest beauty market in terms of consumption, sales, and revenue. A wide variety of Chinese beauty products are available online for consumers to buy in bulk at much cheaper rates as compared to other popular brands.
They come with minimal and simple packings and are easy to use and can be kept over a long period of time. Personalized and digital stores are the future of the Chinese beauty industry with traits to conquer the world.
3. Phones and Computers
China’s computer companies and cell phone brands have high rising potential with their growing share in the global computer and mobile phone market. The smartphone industry in China has grown to become one of the biggest industries, including companies such as:
LeEco (former Letv)
Without any doubt, learning about and playing with new toys is exciting for both kids and adults. We find action figures, cars, dolls, digital toys, building blocks, board games — the list goes on — valuable enough to spend our money, time, and living space on them. An everyday part of life is playing with toys.
Toy manufacturers in China make toys with a variety of materials which includes plush, wood, RC, plastic, and many more. The toys manufactured are divided into the following categories:
Electronic and RC toys
Plush and soft toys
Each company producing such toys is capable of producing millions of such products in a month at really cheaper rates.
List of seven Chinese toys popular among children:
Paper Fortune Teller
Books and Flash Cards
If you need high-quality pet food with competitive prices Chinese companies are there for you as they offer good logistic services with brilliant packing and material. Some of the pet supplies manufacturing companies in China are:
Ainong Biotech Co. Ltd
China Farto Industry Co. Ltd.
Hebei Farmachemie Trade Co. Ltd.
Huzhou International Trade Co. Ltd.
Sanherb Biotech Inc.
Shanghai Tow Intelligent Technology Co. Ltd.
Shijiazhuang ZDHF Stock raising Co Ltd.
Shijiazhuang Guanghua Pharmaceutical Co.
Outdoor and Travel Products
Chinese outdoor and travel gears are well known for their reliable building and manufacturing around the globe.
Chapter 4: What are the best production companies that manufacture products in China?
As China is one of the great countries that produce a great number of products in a short period and are cost-effective manufactures, there is no doubt, competition between companies that produce bulk products.
But not every company produces good quality products, in lesser time and money. Below, we have mentioned some of the best manufacturers in China that are efficient in producing the best quality products in bulk, in less time as they have plenty of labors to work efficiently on large projects and provide a good service to their customers. So, the best production companies that manufacture good quality products in China are as follows:
Concepto Studios, Inc.
JingHongYi PCB (HK) Co., Limited
Chapter 5: What you need to know on how to manufacture a product in China?
1. Understanding middlemen
The most essential factor that should be considered by someone seeking an answer to “How to Manufacturer a Product in China?” is a middleman. Middleman is the term used for someone who is a source of link or connection between various parties. When sourcing products from other countries a third party is required for negotiation as manufacturing companies may lack such systems facilitating foreign buyers.
2. Selecting a good factory
Seeking a good factory is the most valuable aspect for someone seeking “How to manufacture a product in China?”. A good factory can be selected by just seeing the past reviews of the factory given by the consumers. A good relationship must be built with the manufacturer as this is an essential part of their culture. Next thing is to ask for their license, registration record and ISO certification as this will confirm their validity and you are good to go.
An ISO 9001 certificate validates that a Chinese corporation has employed a satisfactory structure for:
Measurement, analysis, and improvement
Effective, low-cost communication
Chinese factories have nowadays hired a lot of English-speaking staff to communicate with other countries effectively. Just use simple English with small paragraphs and an easy-to-understand format.
Keep emails simpler while emailing the Chinese supplier
Keep contact with fewer people
Use ‘Wechat’ to communicate with the supplier
Follow up with phone calls and messages
Take in your third-party inspection company when coordinating with suppliers
Create a QC checklist to set clear quality requirements
Share product examination results and scrutiny outcomes with your supplier
Meet the supplier in person if you can afford it
Trust your supplier (but keeping verifying every step and process)
Whatever is the way you like and choose, the positive impact and influence on improving communication can make your product quality and supplier relationship well worth the extra time spent and effort was done by you.
3. Short Period And Low Cost
The biggest hurdles one faces while outsourcing from China is shipping. The cost of shipping must be considered while shipping products from China. Another cost to be remembered is inspection cost, customs cost, and tariffs, and this time too. Ocean freight shipping is more affordable than air freight. Sometimes items also get held up at ports by custom inspectors. Ensure that you have accounted for all of the above factors in your budget and schedule.
4. Optimized Bill Of Material
Optimizing the bill of material help buyers to estimate the cost accurately. This will help the product procurement and logistics for product creation. Five secrets that can benefit the buyers to optimize bill of material are as follows:
Get the information related to BOM into your system as early as possible.
Don’t worry about getting the last possible little thing into your database.
Ensure that your system is capable of enduring any changes made in the data at the eleventh hour.
Don’t forget about retired assets.
Establish and maintain the integrity of the BOMs. Make this part of the culture.
5. Quality And Test Assessment Plan
Prepare a plan to test the quality of the product and this can be achieved using different techniques and software. This helps smooth the proceeding of the deal with the satisfaction of both parties. The quality assurance plan outlines documented policies, procedures, and activities considered to monitor and estimate the quality of processes required for testing.
6. Packaging, Design, And Review
Product packaging in China is the most perceptible depiction of a brand for buyers and consumers. Indeed, packaging design has less than 3 seconds to grasp and seize the attention of customers and consumers. Those 3 – 5 seconds are really significant because more than 70% of purchasing decisions are made at the shelf.
However, when it comes to the design-related topic, China is still regarded as a unique market, which is even different from other Asian countries. Thus, colors, shapes, materials, and designs are culturally specific.
Thus, getting the correct unboxing experience can have a stern influence on your sales, that is why you need to understand the packaging skill and way of Chinese manufacturers in 2021.
One should review and browse through the internet in search of various products manufactured by the company they are connecting to get familiar with the quality of packing, design the company offers, and their reviews the consumers give after buying and using that product over a significant span of time.
7. Documentation review
Documents should be reviewed after the deal is done to make sure that everything decided is as you wished and wanted to be. Chinese are way too serious about commitments they make so to match them on should be perfect and pretty confident in the documentation that is the only source of claiming if something goes the wrong way.
Ask for the following documents from the manufacturer or supplier:
Bank Account Certificate
Trade registration certificate for foreign countries
Custom Registration Certificate
Chapter 6: What are the benefits of outsourcing manufacturing to China?
Three basic imperatives for Chinese manufacturers:
Achieve Excellence in Manufacturing
Look upstream and reliant on innovation
Tame and handle supply-chain complexities
For Chinese manufacturers, now the imperatives are to boost and enhance productivity, polish and refine the product-development strategies and approaches, and tame supply-chain complexities. The manufacturers doing this previously have been enduring a competitive edge over ones not focusing on these vital imperatives.
1.A Wealth of Material
Save money on the manufacturing of products. Reduces costing, overcharging, and resource expenses. This cuts operating costs and training costs that can be converted into profits. The cost can be cut between 30 to 70 percent depending on the intensity of the product.
2. Focus and Determination
Focus and determination the major traits found in Chinese workplaces that have led them to become the business giants in the world. Chinese have a shear belief in the quote “where focus goes, energy flows”. Determination is something that aids the Chinese in controlling and deciding something’s outcome or nature.
3. Affordable products
When you give orders to Chinese manufacturers, you are more at an advantage compared to other manufacturers around the globe. Why? Because you easily get high-quality products at cheap rates compared to other countries.
This comes at an advantage to both the buyer and the seller. As a buyer and a client, your service provider, also known as your manufacturer, would offer you cheap and affordable discounted rates for orders in bulk amounts. Therefore, resulting in less money spending and more saving along with easily getting done with your work.
4. Prompt Service
Due to a large population, the workforce is ample in China. With a high proportion of probable employees, Chinese factories have no hesitations about the appointment of more people, reliant on the volume of business you assign them. Therefore, you are guaranteed a faster and earlier production rate.
5. High-Quality results
Chinese at the end of the day believe quality is the most essential factor to be considered for manufacturing high-end products. Some of the factories are fastidious in their quality control checks. They even can send you samples before the manufacturing process begins.
The variety offered by Chinese manufactures is evident around the globe and online too with the help of store listings and product listings. The country has the capability to produce any product of any required specification.
The Chinese have developed such flexible terms and conditions which help consumers to communicate with them and buy their products efficiently. Chinese suppliers and manufacturers teach us the administration’s contemporary imperatives, responsiveness, improvisation, flexibility, and speed.
Chapter 7: What are the steps to find the best-matched manufacturers in China?
The most essential part of “How to Manufacture a Product in China” is finding the best-matched manufacturers and below are a few basic steps that one should follow to achieve this goal.
1. Find A Supplier
Seeking a supplier in World’s largest business hub, China, is particularly the primary stage in founding an enduring tie with one of the thousands of suppliers looking to assist you to achieve your supply chain requirements in a cost-sensitive manner.
Since, a lot of industries, companies, start-ups, and entrepreneurs have by now built relationships with China, substantial growth in the resources available to manage, work with, and to fund those arrangements. Five great initiating points that will help someone finding a supplier in China are given as follows:
Alibaba – without argument the world’s largest business-to-business (B2B) portal
China Sources – one of the popular websites that manage communication and connections between businesses as well as the Chinese producers, manufacturers, and suppliers
HKDC – this site offers a wide-ranging encyclopedia of suppliers in China with over one million listings and business matching is also offered by them.
Smart China Sourcing – an ISO9000 certified company that lists 80 sourcing experts
Made-in-China – a leading business-to-business (B2B) portal that suggests admittance to sourcing experts and entitles quality products and companies.
2. Compare The Prices
The datum for price comparison in China is always considered as the U.S.A. This is done by researching different manufacturers manufacturing the same product that you need. This is an essential step as this keeps you competitive in the market and beware all your competitors are doing the price comparison before getting a product manufactured from China.
3. Calculate The Cost
The landed cost of imported products must be known by businesses in advance so that a smart and sensible decision is made about their business. The cost of all the shipment process and logistics costs needed to deliver the products to their final location added to the final cost of products is referred to as ‘landed cost’.
All over the global trade process, there can be dozens of supplementary charges, payments, levies, and cash conversions that buyers must be conscious of in advance to calculate the precise landed cost of the products.
The cost of the products, cash conversion costs, air freight, and sea freight and logistics bills, import charges, port charges, customs clearance fees, import duties, and taxes, and local delivery, just to name a few.
The landed cost of imported products should be understood clearly by the buyer which allows businesses to strategize on how much initial investment will have to be financed to purchase the required products and get them transported through the border to the final location.
On top of that, it also benefits industries to have an idea about their sell prices and revenue figures that will crop up when the products are sold.
Here is an example of how to Calculate the Landed Cost of Imported Products from China
Step1: Convert all foreign currency to local currency
Step2: Add all local import costs and charges from the air or sea freight forwarder
Step3: Calculate import duty charges
Step4: Add import dues and taxes
Step5: Finalize the final calculated cost and compare it with your competitors if you can
4. Perform Inspection
Today, China is Asia’s chief manufacturing center and a major sourcing location for brands and vendors globally. Worldwide, “Made in China” is no longer at all times synonymous with bad quality, but efficient and effective quality control mechanisms remain a priority for any business looking to secure and protect their supply chain.
These quality control mechanisms in China help you:
Guard your brand against operative and moral risks
Guarantee harmless and right working surroundings and circumstances in your supply chain
Extract a complete and detailed profile of your Chinese supplier – before you hand them your business
5. Arrange Shipment
Arranging shipping for your products from China to locations where you require them is not an easy task especially for newbies. Here is the step-to-step guide which will help the importers getting their products manufactured from China:
Recognize your import rights
Categorize the products you want to import
Ensure the goods needed by you are legal in your country or at the destination where you need them
Calculate the landed cost clearly
Place order after finding a reasonable supplier
Arrange the cargo and track it parodically
Do arrangements for receiving the shipment before the arrival of your cargo
Obtain the shipment and ensure everything is intact and the same as you ordered and expected
Chapter 8: Costs of manufacturing product in China
1. Cost Before Manufacturing
Cost before manufacturing is known as “Direct Cost” and this includes manufacturing material cost, their sourcing cost, and the fabrication cost required to turn these raw materials into a useable form.
2. Cost During Manufacturing
Cost during manufacturing includes the factory infrastructure, the power utilized by the machinery to produce a product, the wages of workers, and different chemicals, materials, production processes, and tooling and molds required.
3. Cost After Manufacturing
This mainly includes the margin cost, packing cost, transferring products manufactured to ports and then the big chunk of this cost includes the shipment cost.
Chapter 9: How to see if a product is economical to produce in China?
This is one of the most important factors before you begin your production of any good in China. You need to know which products are economical and are going to benefit you in your business as well as have a positive impact on your pocket. To begin, you need to find out the cheap products that have high demand in other countries and are good to incorporate in your business and production.
–Go for the products that are easy to use, like basic necessities, and convenient for the customers and the general public to use in their everyday lives.
–Simple and basic products that are not technical and do not have extra high features that make them expensive.
–Cheap and affordable products that are good to use but do not require much quality like, plastic sheets, toys, basic clothes, cleaning & washing equipment, disposable things, and recycled papers and other stuff. These products are easy to use and are disposed-off quickly after using them once or twice. Therefore, they do not need to be of high quality.
–Products that are higher in demand but are cheaper in the market.
–You must evaluate and analyze by purchasing a product and studying it thoroughly to know what are its sale rate. They need to be high and have a good and high-profit margin.
However, do not go for electronics, medicines, toiletries, and personal hygiene products at cheap rates of low-quality products as they are the kind of products that will have an impact on a person’s personal health and may result in some terrifying situation.
As for electronics, low-quality electronic gadgets may result in poor condition very soon and stop working. This will have a negative impact on your business since customers will start complaining and in the longer end, stop purchasing from you. So do not risk when it comes to these products.
Chapter 10: Frequently Asked Questions About Manufacturing a Product in China
1. Is the manufacturer of many products a good manufacturer?
No, we need to understand a manufacturer is only good at one or two products that are not popular so they decide to manufacture a variety of other products.
2. Ways of shipment of the product from China?
By air courier, sea freight, and air freight.
3. How to calculate the full cost for manufacturing products in China?
Do the research. Contact producers of similar products and also consumers already buying similar products from China. Keep in view all of the parameters influencing the cost of the product.
4. Why does google have less information about manufacturers in China?
Chinese manufactures and companies rarely make online media accounts for their promotions or create advertisements online. There are more manufacturers on Alibaba than on the web.
5. Should I go to China to visit my manufacturer?
Visiting a manufacturer is time-consuming and expensive as a lot of work, time, energy, and preparation needs to be done to visit the manufacturer physically all by yourself. Also, the distance between the suppliers may not be in favor of everyone.
We now have learned that it is an ongoing process looking for manufacturers to manufacture your product. Spending time is the only way to get the right choice of manufacturer. Either you do this yourself or you get your team to do it for you.
You have to get the best production team to produce a good amount of products at cheap rates that will help you save on your pocket and benefit you in your business too. You just have to follow the simple steps, elaborated in this article, which will help you decide the best manufacturer and help grow your business and brand successfully.
And in order to understand ‘how to manufacture a product in China’, one really needs to go through the whole article and have to do the perfect research regarding their product in the market and decide which manufacturer best suits them and which of their products are actually good for you, depending on what you have on your list.