Advantages of Manufacturing in China
The advantages of manufacturing in China are clear. Chinese firms are highly educated and skilled. They produce the most products per dollar that any other country in the world. In addition, China’s market is very competitive.
Many companies often offshore their production to lower-cost areas such as Mexico. However, it may be tempting to reduce overall production costs and attempt to boost productivity at the expense of quality. That’s to say, lowering costs is an important reason why American companies seek manufacturing offshore. But to improve their bottom line, they must realize the tradeoffs between lower labor costs and increased productivity. That’s where the opportunities for increased productivity come from – and why manufacturing in China can provide these advantages.
When Chinese factories ship raw materials and finished goods back home, they make a significant contribution to the total cost of manufacturing. However, China’s transportation and shipping logistics can sometime be an issue. To solve this problem, Chinese companies often send components from the local production factories onshore. Then, once those components have been completed, they transport the final product from the final factory to the distributor or retailer. While this process reduces the time of travel between factories, it also increases transportation costs for each unit.
On the flip side, an advantage of manufacturing in China is that labor costs are often much less than those in the U.S. This is because there aren’t the stringent requirements associated with workers’ rights in China like there are in the U.S. In addition, many Chinese factory owners do not employ full-time Americans. Instead, they hire contract laborers from Vietnam, India and other countries. Finally, because there is a lack of regulation for labor practices in China, many Chinese workers live and work in conditions that would qualify as slavery in the U.S.
Not only are there many pros to manufacturing in China, there are also some cons. While there are low labor costs and a strong supply chain due to the close proximity to the United States, many people wonder about worker safety standards in China. One problem is that many factories in China have dangerous work environments – some where there are no regulations at all. Additionally, outsourcing factories in China have caused rising numbers of worker-related accidents. These incidents have led to lawsuits in the U.S. that have been settled with local businesses paying out large fines.
The advantages of manufacturing in China are plentiful, but there are some cons as well. There are some challenges involved with the close proximity to the U.S. As China continues to develop and become a more prosperous nation, the advantages of working in China will likely continue to grow. However, American manufacturers should do whatever they can to ensure that they aren’t shortchanged when it comes time to pay China back for their services.