Is it always cheaper to produce in China?

China is known as the “World Factory” and has the most complete industrial chain. In Europe, we see more and more imported products that are made in China, relatively cheaply, with quality improving noticeably in the last few years. This is encouraging and as a result an increasing number of European companies are industrializing their products in China.

cheaper to produce in China

Whilst this might be straightforward for an international company, who already have subsidiary branches in China with local Chinese employees, for startups and small companies, it’s altogether another matter. What makes it complicated? Often your entry point to the Chinese market will be via the web, most probably with a sales contact from Amazon, or AliExpress. Often therefore, you are dealing with import-export companies. For a business only dealing in mass production, or if your product is simple, an import-export company might be enough. However, if you need to do any R&D, and improve the existing products, then communication and negotiation can be a headache. Moreover, every technical modification will cost you time and money.  

Actually, these intermediate agencies play an opaque role between you and all the other suppliers. Most of the time, you don’t have any direct contact with your suppliers. This has considerable consequences. It results in a loss of efficiency: inappropriate technical expertise, miscommunication and endless discussions to and fro. An intermediate company can simply hinder your development. It is also complicated to capitalize on your work, for instance, getting access to technical documents or the supplier’s products source code is difficult and you need to start from scratch every time you change partners. Sometimes, it turns out that the industrialization becomes more costly in China for all these reasons.

intermediate

Our advice

Always take control of your R&D and your suppliers, especially if you need to industrialize your products. The cost reduction will be obvious when you know who you are paying and what you are paying for.

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