When you allocate specific business and manufacturing to an overseas agent or specialist, that’s overseas outsourcing of manufacturing. It is a way of making product production more global and efficient, allowing companies to produce products faster and cheaper. An outsource manufacturer is aware of this efficiency and low cost, so it can outsource production to China, to India, or other countries where jobs are scarce. However, outsourcing manufacturing to China is probably the most common way to do it.
Disadvantages to Outsourcing
You’re possibly thinking, “What are the outsourcing manufacturing pros and cons?” Or “What comes out of US outsourcing to China?” On the cons side, one possible problem is a lack of direct oversee of overseas employees. Because you’re not there to monitor your overseas plants, outsourcing to China could mean not catching quality control issues, which can lead to inferior, poorly made products. This would certainly affect your company’s reputation in the U.S. No one wants poorly made products, and this can be an issue with the outsourcing of manufacturing. It is important to practice manufacturing in China quality control if you want to outsource there.
Another major problem is the way the public perceives outsourcing. Outsourcing to China, or any other overseas, developing nation, carries the stigma of exploitation of that nation’s citizens. Consumers don’t, and shouldn’t, like a company that has its employees working in hazardous work conditions, so you must work to make sure this is not the case if you consider U.S. outsourcing to China.
Moreover, many American resent companies that send jobs that can be performed in the U.S. to an overseas manufacturing facility. They believe that companies are putting their profits ahead of the American economy. Finally, there is the problem of possible confidentiality breaches. When a company outsources manufacturing overseas, it is also allowing the overseas third-party company access, the Chinese sourcing agent, to its confidential information. Obviously, you do not want this, so this is something to consider, too.
Advantages to Outsourcing
But there are benefits to outsourcing. When you outsource to China, you reap benefits that you would not get by producing in the US. One of the benefits is risk-sharing. By outsourcing manufacturing to China, your company relieves itself of the burden of bearing all of the burdens and complaints. There is also the benefit of expediency and expertise. You can find a vendor that is an expert in your field. This means that you will not have to worry about gaps in communication, making for a faster production process and fewer headaches. These third-party agents will have their own specialized machinery and technical expertise, making things even smoother.
Also, China, as the largest country in the world, has a great deal of manpower, manpower that you can’t get in the US at the same scale. This means more workers for you, and a larger pool of employees from which to choose. China also has a vast amount of natural resources, meaning that you won’t be as burdened by having to ship raw materials there. Finally, outsourcing to China means lower operational costs for your company. By contract manufacturing outsourcing to China, you are spending the same amount you’d spend in the US for labor, but utilizing more actual workers.