Partnering with a contract manufacturer could be one of the smartest business decisions you can make. Outsourcing some of your product development and manufacturing labor can reduce costs, improve quality of products, help streamline tasks, and potentially allow you to scale your operations without the “growing pains” of a traditional small business.
Choosing the right contract manufacturer gives you all of these benefits and more. However, if you don’t find the right fit, you could lost time and resources to an ineffectual business relationship and have to start from square one. When choosing your manufacturing partner, these are the roadblocks you should expect, and how to deal with each of them:
Language and cultural barriers
Oftentimes, finding a quality and cost-effective partnership requires you to look overseas. Most contract manufacturers that offer the best quality and price are in China and other Asian countries. This doesn’t mean that you can’t find a good contract manufacturer in the States, however the cost savings will be nominal in comparison to overseas manufacturers.
While manufacturing overseas is beneficial for your business, it can be difficult to find, let alone work with, a company that doesn’t share the same language, legal structure, or common business practices with you. Chinese businesses operate very differently from U.S. businesses, and are sometimes more difficult to communicate with unless they have a proxy or business associates with strong English skills. Many American businesses opt to use a business development partner or proxy to match them with quality manufacturers and navigate the waters of Chinese manufacturing.
If you have never worked with a contract manufacturer, the process and expectations on both ends may be unclear to you. Before you being interviewing candidates, you should write a detailed Request for Proposal (RFP). The RFP helps potential manufacturers know what the job qualifications, expectations, and goals are. This also allows the manufacturer to create a detailed proposal, so no elements of the contract are ambiguous or underdeveloped.
Make sure you agree to deadlines, quality standards, and other basic goals before you sign an agreement. Also be sure to draft a Non Disclosure Agreement for your contract to protect your copyrights, patents, trade secrets, and product development. Many companies have poor relationships with their manufacturers not because either player is not doing their part, but because communication is not clear and misunderstandings are not addressed.
Quality vs. Quantity vs. Price
Finding the right contract manufacturer means finding the right balance of quality production, production capacity, and cost. If a manufacturer cannot deliver the quantity and quality of products you need on time, and for a reasonable price, you should not even entertain the idea of working with them. There is no reason to settle for less. With the abundance of quality contract manufacturers overseas, it’s crucial to demand exactly what you want upfront, rather than accepting the first “good enough” offer that comes your way.
Discuss payment terms, minimum order quantity, and project deliverables early on. The more information you gain from interviews and proposals from manufacturers, the better decision you’ll be able to make for your company.
Vetting contract manufacturers
Don’t be too quick to trust contract manufacturers, as they won’t be quick to trust you. The Chinese business environment is much different than in America. Business negotiations take longer, and a greater relationship must be built in order for a contract to take place. Because of this, there is no reason to rush into a contract with the first manufacturer you find. Take the time to vet your candidates from former client testimonials, accolades, and recommendations from your business associates.
Working with a business development partner can help you find and vet contract manufacturers in China. With the right partner to guide you, choosing the right manufacturer is easy, and you can start saving money and time.