China’s manufacturing industry, known as the “world’s factory”, China Home Storage Supplier has accounted for nearly one-third of the world’s manufacturing output over the past few years. On the popular marketplace Alibaba alone, there are millions of active sellers and buyers. Finding the right OEM in China can be a daunting task given the size of the options.
From background checks to quality system audits, to building rapport, to negotiating deals, signing a contract manufacturing agreement with a Chinese supplier involves a number of intricate issues.
Below is an overview of contract manufacturing in China and seven things you need to know before identifying a Chinese supplier.
Contract manufacturing in China: what’s the situation?— China Home Storage Supplier
Despite a dip in trade activity in the first few months of 2020 due to the pandemic, China’s exports rose to $237.2 billion in October 2020. This is an increase compared to the value of exports in the same month in 2019. Exports rose 14.5% in October 2020, compared with a 2.8% increase in September.
China has been one of the major exporters since 2013, when the value of Chinese goods exports hit a record $2 trillion. In 2015, the trade volume also reached 594 billion US dollars, a new record high.
An export-focused growth strategy has made China the largest export partner for the U.S. and European markets.
Although China’s competitive advantage lies in the manufacture of labor-intensive products with significant cost advantages, China has also steadily increased its exports of high-tech products, including power devices and computers, in recent years.
Manufacturing is a major sector in China, contributing nearly 40% of GDP. The focus has shifted to advanced manufacturing, especially on the east coast of China. Labour-intensive manufacturing and low-cost production are further concentrated in the interior western and central provinces.
You can do contract manufacturing for almost any product in Shenzhen, China, which is considered the center of manufacturing in Asia due to the ease of service providers and manufacturers.
Whether you are new to contract manufacturing or considering outsourcing to China for the first time, there are some important factors to keep in mind before diving into contract manufacturing. Here are the top seven factors you need to focus on:
Protect Your Intellectual Property —China Home Storage Supplier
Many business owners may consider their U.S. trademarks and patents sufficient to protect their intellectual property when considering contract manufacturing in China. While U.S. patents are a good start, they won’t protect your product when manufactured in China or other countries.
This is why it is recommended to register intellectual property rights in China when you intend to manufacture products in China.
Trademark or TM: Registering a trademark in China is fast, cheap and easy. Trademark registration is a must for those who wish to manufacture in China and for sellers or operators in China. Unlike the United States, which is based on a first-to-file system, China adopts a first-to-file system.
As a result, Chinese squatters seek out startups and continue to register their trademarks. Once the startup entered the Chinese market, the owners were shocked to find that their trademark had already been registered by someone else. Companies like Groupon and Tesla have also encountered this problem.
Some OEMs (Original Equipment Manufacturers) may also register your TM and threaten to sue you if you try to transition to a new OEM or block exports.
Patents: Filing a patent in China involves translating your application into Chinese and filing it in China prior to public disclosure.
You also need to register your intellectual property with Chinese customs, which will block products that infringe someone’s registered intellectual property in China. Products that violate the registration of intellectual property rights cannot enter or leave China, which is an effective way to prevent counterfeit products from being sold around the world.
Trademark applications are regularly published by the China Trademark Office. You can investigate this and oppose any trademark application by a squatter or competitor before registration.
Choosing the Right Chinese Manufacturing Partner— China Home Storage Supplier
Some important factors to consider when choosing a contract manufacturing partner in China include:
Capabilities – Listing a manufacturer’s capabilities, including their current assets, technologies, and equipment, is the first step in filtering them. You can browse popular marketplaces listing Chinese sellers such as Alibaba, Made in China, Global Sources, and DHGate.
Experience – Assess whether the contract China Home Storage Supplier is particularly experienced in the industry/product area you are looking for. Investigate the number of years of experience the manufacturer has and whether they have the certifications and licenses required to manufacture.
It is important to verify that the ISO 9001 certificate is genuine by doing some background research. Doing this kind of research yourself does take a lot of time and effort as you have to understand all the elements on the certificate. You can also search for information in CNCA or CNCA’s database. Make sure the ISO certified company name, address and activities match the manufacturer’s business license.
Capacity – This is related to the volume of orders a contract manufacturer can handle and its ability to expand. If your order is very small, and if they have the equipment, labor, space, and equipment/technology to handle bulk orders or high volume orders, check to see if the supplier can meet your needs.
Create a clear original China Home Storage Supplier or OEM contract
The purpose of drafting original equipment manufacturing or OEM contracts is to ensure that products manufactured in China meet the commercial and technical requirements of foreign companies. An OEM contract is also evidence of a manufacturer’s compliance with the foreign company’s intellectual property and confidentiality.
It contains other details including specifications, price, packaging and packaging, design and model, equipment used, materials used, and protection of confidential information.
The factory exists— China Home Storage Supplier
If you can afford the cost, make sure one of your employees shows up at the factory in China on a regular basis. It is important to have someone represent your factory in China to ensure regular contact and to help you ensure manufacturing to your quality and technology.
Evaluation Samples— China Home Storage Supplier
Product samples are crucial when contracting with a Chinese manufacturer, as they allow you to feel, see and evaluate the product before production begins. Samples are a key factor in assessing whether a contract manufacturer is up to the task.
Build rapport— China Home Storage Supplier
Many different languages are spoken throughout China, and the official language is Mandarin, known as Mandarin in mainland China. Nearly 71% of China’s population speaks Mandarin, but many other languages, such as Mongolian, Cantonese and Tibetan, are spoken and have official status in different regions. Although English is considered a business language, only about one in 10 people in China speak business English. When communicating with China Home Storage Suppliers, you cannot assume that the sales rep or supplier speaks fluent English or that they understand your requirements. Click here to get more tips.