About 8 or 9 years ago, the manufacturing industry in the United States was turned on its head by breaking stories about the low cost of producing goods in China and how American companies simply could not afford to keep up. In order to even try to compete with China’s low cost, high output model, American manufacturers were slashing their prices so much that they were barely bringing in a profit, if at all. It became exceedingly clearer as American companies began to suffer immense losses that the only answer that seemed viable was to move production to China or face total elimination from the market. American companies had to think seriously about how to manufacture new products from China or deal with the grim reality of shutting their doors forever.
China manufacturing has its perks, but it also comes with its fair share of risk. When you submit the specs for your product to a Chinese manufacturing company, you give up a little bit of the control. You won’t be on site to oversee operations and make sure that your product is being made according to your design and specs. You also won’t have as much of a grip on how well your intellectual property and proprietary information is being protected.
The last thing you want to do is hand your product over to a China manufacturing company, only to have your idea stolen, reproduced, and sold through other means without your knowledge. If this sounds like an extreme scenario, unfortunately it is not. Too many American business owners desperate to keep their operation afloat have fallen victim to China manufacturing companies that reproduce and sell the original product without permission. If you are interested in learning how to manufacture new products in China, but have been hesitant to pursue this option because of the dangers and risks involved, the steps below will help you become a smarter deal-maker and help your company thrive.
1. Conduct thorough research
There are plenty of things that you would never buy sight unseen, right? So why would you enter into any type of manufacturing agreement with a China manufacturing company without visiting the factory first? It goes without saying that you have to spend a lot of time and energy researching factories in China before you decide which one will begin to manufacture your products, but conducting this research at a distance via the internet is not sufficient enough.
Once you compile a list of potential factories, there are some resources you can utilize to verify the quality of these companies. The first place to start is with Chinese government agencies like The China Council for the Promotion of International Trade and The China Chamber of International Commerce. These agencies will provide you with basic information about the China manufacturing companies you are interested in so that you can determine whether or not they seem reputable. After cutting your list down to a few top contenders, it is time to spend some money on a professional research firm that can delve deeper into the underbelly of these factories to find out if there is any negative information lurking out there. Their findings should definitely help you determine the best factory for you to manufacture new products from China.
The next step is to actually pay a visit to the factory you think you want to do business with. Anyone can make themselves or their business look and sound good online. You need to visit in order to make sure the factory, and the businessperson representing the China manufacturing aspect of the deal, both check out.
2. Establish a Business relationship based on honesty, fairness, and trust
If you want to manufacture new products from China, you have to prepare yourself for a whole different way of doing business. When establishing partnerships with factory owners in China, you will quickly recognize that a little fairness and a firm handshake go a long way, and will usually hold more weight than any American legal document you have in your arsenal. Non-Disclosure Agreements and other legal documents designed to protect American Business owners don’t really translate into much of anything in the Chinese business world. Of course, this doesn’t mean you should toss all forms of legal business documentation out the window when entering into a relationship with a China manufacturing company. It simply means that you need to alter the way you do business to accommodate a different culture.
3. Brand your product design
Even if you feel pretty confident that the China manufacturing company you have chosen to do business with is completely trustworthy, you just never know what can happen. If you want to add an extra measure of protection to ensure that your products are not being duplicated and resold without your knowledge, then you can easily mark your product molds with a distinguishing logo on the bottom. This way, if a customer contacts you about an issue with your product, you can verify whether or not you are legally responsible for it by checking for your custom mark. This is the most straightforward way to reduce the problem of product duplication without your knowledge. While it may not eliminate the problem, it will certainly help to minimize it.
The bottom line is that brand theft is simply a risk you take when you manufacture new products from China. The best business move you can make is to work hard to establish great business relationships with your Chinese counterparts without coming off as fake. If the owner of your China manufacturing company genuinely likes and respects you, and feels that you genuinely like and respect them, they will not have any motivation for crossing in any way.
Moving the production of your product to China can be a difficult endeavor, but if you partner with the right China manufacturing company, you can begin to manufacture new products from China and start seeing a major improvement in your company’s balance sheet at the end of the quarter.