From finding the right supplier to overcoming language barriers, choosing to manufacture your product in China can be as challenging as it is beneficial — even for experienced entrepreneurs.
When deciding on a Chinese manufacturing partner, there are a lot of things to consider. To help you make an informed decision, we caught up with Ron Keith, founder of Riverwood Solutions. A supply chain and manufacturing expert, Keith advises entrepreneurs to keep the following four things in mind when taking their idea abroad:
1. Names aren’t everything
You may think a well-known name in manufacturing is the best option — think again. According to Keith, a manufacturing partner does not need to be a name brand, tier-one supplier. In fact, he warns against focusing too much on finding a well-known manufacturer for many reasons, one being that you might end up paying more just for the name.
“It’s not just about getting a name that people recognize and makes them feel comfortable,” says Keith.
What should you focus on? Keith suggests finding a manufacturer that can give you the right product, the right quality and the right price. After all, it’s more important to work with a supplier who meshes with your technical needs, business model and geographic requirements.
2. Don’t confuse communication issues for quality control issues
Quality control issues are a top concern when deciding on a manufacturer. Contrary to what you may think, these issues are not necessarily more likely with an overseas supplier versus a local one. Instead, Keith says entrepreneurs need to be aware of the potential for communications issues and not just those linked to language barriers. For example, interactions with others, specifically in a work environment, can be interpreted differently in other countries.
“You lose a lot in translation that doesn’t even have to do with language,” explains Keith.
How do you deal with communication issues? Keith urges all entrepreneurs to have a local contact abroad or work with an outside firm like Riverwood Solutions that specializes in manufacturing overseas. Knowing someone who speaks the language and understands the cultural aspects of doing business in another country is invaluable. This can help you fully understand the terms and conditions agreed upon, leaving little room for misunderstandings and costly surprises.
3. It’s all about guanxi.
When doing business in China, relationships matter. As Keith explains, guanxi is a time-dependant process that refers to building relationships and goodwill. Compared to the United States, Chinese business culture is more personal, revolving around relationships built on trust.
How can you establish guanxi? Keith advises entrepreneurs to be open and honest with Chinese suppliers from the beginning. It’s important to start out slow and make it clear that you want to build a relationship. He also warns that in manufacturing, unexpected issues are likely to pop up. It’s how you respond to these issues that matters most. For example, if your go-to reaction is to blame the supplier, it teaches them to have a very cautious approach to you.
“We see so many people that will teach their supplier how they are going to behave and then wonder why their supplier acts the way they do,” explains Keith. “Especially in China, you cannot talk your way out of a situation that you have acted your way into.”
4. Knock-offs can happen anywhere
Keith reminds entrepreneurs that manufacturing in a country with different intellectual property laws does not necessarily mean your idea is more likely to get knocked off. He warns that if you have a really successful product — one that can generate high profit margins — it’s very likely to get knocked off, no matter where it’s made.
Do you need to worry? Keith explains that most Indiegogo campaigners do not need to be concerned about getting their product knocked off if they choose to manufacture in China.
“It isn’t the fact that you build it in China that makes people knock it off,” says Keith. “What makes people knock it off is that it’s a product that can be duplicated, there’s big demand and it seems like a pretty fat margin.”
Have questions about manufacturing abroad? Indiegogo and Riverwood Solutions can help! Learn more about Indiegogo and Riverwood solutions today.