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China Manufacturing Fashionable Again
THE SOURCE CODE BLOG
Like fashion trends, manufacturing experiences similar ebbs and flows with regions or countries becoming extremely desirable for periods of time, then not. And like fashion no matter what the hottest trends of the day are, theirs always an undercurrent of classic which never goes out of style.
So when we look back over the past several years at the manufacturing landscape, one cannot help but notice the boom and slow down (not bust) nature at the interest level in Chinese manufacturing.
As the recession begins to take hold in North America, low cost China sourcing was as trendy as it gets. It seemed everyone and their mother wanted access to China production. All with the same mandate in mind, reduce product costs by 15-30%.
And while organizations succeeded at achieving their product cost goals, it largely came at the expense of product quality. Due to the influx of interest China factories were busy but because most companies wanted the cheapest price, manufacturers began substituting quality inputs for cheaper/weaker materials in order to keep themselves out of the red. This plus several other behind the scenes factors (less Chinese wanting to work in factories, the rise in RMB vs. USD and the central government change over) eventually led rising product costs and people rethinking their supply strategy.
Thus enter the buzz word of last year, reshoring. Not entirely sure how this movement began but it picked up a lot of media momentum very quickly. Presidential initiatives were formed and many articles were written about the benefits organizations were receiving. However these were largely narratives based on isolated circumstances.
You mean to tell me, the product cost pressures most companies were under at the beginning of the decade suddenly evaporated inside two years? I will concede reshoring may make financial sense for certain products where high shipping costs and low labor input are involved. Yet the reality still remainsreshoring has not taken hold and plenty of challenges await those who aim to implement this solution.
Famously before Steve Jobs died, President Obama ask him what it would take to have the iPhone manufactured in the US. Steve plainly replied “Those jobs aren’t coming back.”
Importers have largely realized there is no next china and many of the so called “next” exotic manufacturing destinations have not worked out to people’s expectations. As organizations experienced through 2008-2011, moving production is risky and takes hard work especially for small/medium enterprises.
Not to mention, China is still working well for the overwhelming majority of people sourcing from its vast product offerings. IN addition to the Chinese credit they are focused on improving every day to meet the needs of their customers. I myself just got back from China and all our approved suppliers I met with, sang the same tune.
How do we increase automation to improve product quality while decreasing or maintaining our per unit cost. This is the next challenge in the evolution of Chinese manufacturing but one I believe they will be able to achieve. Like fashion looks, classic my never go out of style but it can always be refined.
That’s it for today. Stay tuned for the next weeks post.
(For more than 10 years, GCP Industrial Products has successfully offered its customers a unique sourcing process that allows them to save money, streamline their supply chain and grow with new products. Our plans are to continue to grow based upon mutually beneficial relationships and the quality of our products and services to our ever growing customer base. To contact us please click here or phone 1-888-893-5427. Thank you.)