One of the fastest-growing economies in Southeast Asia is China. From business, leisure, and tourist spots, China has a lot to offer. Also, the country’s history and culture are fascinating because they are so unique.
China is the third-largest country by area and the most populous country in the world. In fact, the vastness of the country necessitates the usage of five different time zones.
When it comes to outsourcing, China is a perfect location to manufacture clothes, electronics, steel, and more because of its robust infrastructure and resources.
Many western companies decided to outsource in China because the services are also relatively low-cost while getting the advantage of a well-trained workforce.
The impressive growth of China’s BPO sector
Since it began on a budding scale in the early 2000s, China’s outsourcing business has grown dramatically. China’s business process outsourcing (BPO) industry in 2016 included IT and other offshore outsourcing services for domestic and overseas markets.
China is the world’s largest manufacturing nation, contributing 28.7 percent of global manufacturing output in 2019. As long as Shanghai has competent workers and brilliant engineers, it will remain a manufacturing hub for high-quality electrical equipment.
In China, Achievo is one of the top US-focused outsourcing suppliers. The company has over 1,000 people worldwide and serves a number of Fortune 1000 companies. Some of their prominent clients are DaimlerChrysler, Fujitsu, Mercedes-Benz, Siemens, and Hitachi.
Why do companies outsource to China?
Offshoring is not an easy decision to make. Outsourcing requires in-depth research to guarantee that your budget will not be compromised while keeping the quality of your products.
There are many reasons why companies from different countries outsource to China. Here are the few primary reasons why:
Outsource to China is less expensive
In every manufacturing company, the low cost of labor is the primary reason why they outsource. Many businesses think that moving their operations to low-cost countries like China will save them money. However, this doesn’t mean that the production is being offshore completely.
Chinese workers are well-trained
Since China has been a popular international manufacturing location for so long, businesses there offer comprehensive training for workers to produce imported items. Chinese workers are skilled and well-trained regardless of the type of products that need to be manufactured.
Offshoring offers a lot more flexibility
Outsourcing to China can help you expand your business without stressing you in production. With existing infrastructure and staff in China, making changes is much simpler.
Contract manufacturing businesses may work for multiple companies. It is because a manufacturing company has more production capabilities and can respond to fast-growing production demand.
China has a vast resource of raw materials
One of the great reasons companies are outsourcing to China is because of the accessibility to a wide range of raw materials. This is a good advantage for factories and manufacturing companies who require stocks of materials to create a product.
Why is it cheaper to outsource to China?
When people hear of outsourcing to China, they will think of savings. This is because in most cases, outsourcing to China is a lot more inexpensive than to western countries. And it is why businesses actually outsource: to save money.
By outsourcing to China, you may take advantage of the low-cost labor because their wages are substantially lower than in other countries. You also don’t have to worry about training, internet access, or any other challenges with recruiting workers.
American companies that outsource to China
US companies often outsource manufacturing to China because they can assemble or build items from scratch without investing so much budget.
Here are the top leading American brands outsourcing in China:
American multinational Nike Inc. designs, develops, produces, and markets footwear and apparel. The brand is well-known for its products like sports equipment, accessories, and services around the world.
Nike has more manufacturing units in China than in any other country. Nonetheless, the company still maintains a significant number of manufacturing facilities throughout South East Asia.
Apple Inc. is an eminent electronics, computer software, and online service provider from the US. The company is the most profitable technological firm in the world.
Apple has had a working connection for a long time with Foxconn, a Chinese manufacturing company. Apple companies were having labor shortages in the US, which took months. However, when they outsourced in China, the process took only a couple of weeks.
International Business Machines Corporation (IBM) is an American multinational technology company headquartered in New York City. IBM is a market leader in cloud technology and cognitive solutions.
Many high-paying programming jobs at IBM are being outsourced to China to keep costs down for both the corporation and its customers.
Walmart Inc. is a US-based global retailer with hypermarkets, inexpensive department shops, and grocery stores around the country.
Having most of its products made in China gives Walmart significant cost advantages.
Drawbacks of outsourcing to China
China’s rapid market expansion has failed to satisfy a significant portion of global demand. Because China’s economy is still expanding, the country’s service providers are small and dispersed.
Possibility of products not meeting the requirements
Some product manufacturers in China were questioned because of their chemical content that could be harmful to children.
Examples include the poisonous toys that were intercepted in June 2021 at the Houston Seaport by Customs and Border Protection officials working with the US Consumer Product Safety Commission.
Products that meet China’s safety standards may not always meet those in the local market. Especially if product quality varies, this can cause a lot of trouble for a business if no one is watching.
Lack of English fluency
A lack of English fluency, as well as concerns about intellectual property, is impeding China’s current efforts to compete in the North American and European corporate markets.
Developing and maintaining complicated software and being fluent in English are two of the biggest challenges facing Chinese professional labor. This is the reason why China’s IT outsourcing service providers are unable to handle complex assignments from the West due to a lack of professional expertise.
Extended operation period
Deciding to outsource to China involves extensive supplier chains. Starting a manufacturing process may be a time-consuming operation and tedious.
Due to China’s significant employee turnover, longer lead times are the norm, and outsourcing often entails training new management on a regular basis.