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Subcontracting to Chinese Manufacturers

There are benefits as well as risks involved in subcontracting high-tech finished products as well as components to Chinese suppliers. Often, the benefits outweigh the risks, explaining why many international companies continue to use China to supply their needs.

Selecting and managing suppliers takes consistent diligence on the part of the foreign company's personnel. Before selecting a supplier, it is good to recognize whether the cost is worthwhile to your company. Generally, a cost savings of twenty percent should be the target. This degree of savings would enable the transition and management costs, leaving some extra profit for the company. Cost and benefit analysis studies need to be done to ensure the degree of savings from doing business in China.

Finding the correct suppliers can be challenging since there are so many manufacturers in China already. One must consider the capabilities of each company and its availability to accept more buyers. Consideration should be given to the location of the suppliers you choose. The eastern coastal areas including the cities of Shanghai, Suzhou, Dongguan and Shenzhen are where electronics producers are located largely. These cities would have many suppliers with experience and access to shipping companies. However, the cities of Xiamen, Ningbo, Tianjin and Qingdao can be cheaper.

Checking with the manufacturers must help to determine how well each of them can meet your specifications and how willing each of them is to do business with your company. Taking enough time to research the supplier can eliminate any which may not meet your needs.

Once you have decided upon your supply chain, you must diligently maintain an awareness of your presence in the supplier's life. If you fail to keep in close contact, they may tend to forget you and your restricted specifications. Stay alert about quality control from the moment you contact with a supplier. Either visit the factory at times or have a representative visit to keep you abreast of activities toward getting your product shipped in a timely manner.

The benefits outweigh any risks concerning doing business with Chinese suppliers as long as you apply professional attention to both sides of the contract.

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