Are You On The China Bandwagon, Too? The allure of China is overwhelming. Huge market opportunities, the world’s fastest growing economy, low labor costs that boggle the mind – the attraction just seems too much to ignore. However, and there is always a “however,” entering the China market – either as a manufacturer or an exporter – has many hidden costs. If you’re planning to set up manufacturing operations in China you must be prepared for a government that does not think or operate the way you’re used to – or establish the same controls and safeguards. There have been numerous cases of trademark and patent infringement that the Chinese government has not been inclined to do anything about. Major manufacturers report that it takes up to 10 years to realize any returns on facilities they have established in the country. Doing business in China is expensive and requires a long-term commitment of time and resources. On the flip side, if you are interested in sourcing your product from Chinese manufacturers, there are many hidden costs companies forget to factor into the equation. Most remember to include the exchange rate and shipping, insurance and duties – but the most overlooked one is a longer supply chain that lengthens delivery times on your product and drives up overall costs. In addition, increased activity on the West Coast ports has created bottlenecks that cause even more delays. To get around these delays, some companies are using more air freight, especially for products with high margins and critical delivery times. You can also pay a premium to get preferred treatment on shipments – last loaded, first unloaded. However, the Customs Border Protection Agency (CBP) is demanding more diligence at ports to deter cargo terrorism, so long delays can be expected to continue, at least for the next several years until new technologies help shippers, port authorities and the CBP streamline the transporting of freight across international borders. China is not right for everyone. But if it is for your company and products, then remember to analyze all issues and costs. |
 |