China is the world’s biggest low volume injection molding producer, sometimes referred to as ‘the factory of the world’. China has become an attractive location for manufacturing over the last decades due to its lower cost of labor, highly skilled workforce and good infrastructure. But China’s competitiveness and manufacturing structure are shifting, with more developed regions moving up the value-chain and manufacturing that is labour-intensive moving to inland. More companies are choosing to make their products in China to service the growing Chinese market, and not using it as a low-cost option for manufacturing export products.
Manufacturing’s percentage portion in Chinese GDP has decreased in recent years, however it’s still a key sector with 42.6 per cent of total GDP for 2014. It employs 30 percent of all workers in China and has ensured that China remains the world leader in gross value of industrial output. On the more developed Chinese east coast, the emphasis has shifted to modern manufacturing, whereas lower-cost and labor intensive manufacturing is becoming more in the inland.
But, as China’s emphasis on the service sector grows, increasing numbers of Chinese will be employed in the field of financial services as opposed to agricultural or manufacturing.
Pros and cons of manufacturing in China
Benefits of polycarbonate injection molding manufacturing in China include access to advanced Chinese researchers and developers (R&D) and technologies and science, along with incentives offered by provincial, local as well as central governments. Another positive for manufacturing China is the improvements in efficiency due to the larger economies of scale that exist in China. However, rising costs for labour as well as the shortage of skilled workers and intellectual property protection are important issues to be taken into consideration when looking at production in China.
Other problems and obstacles for production within China are the current development stage and inconsistency with the implementation of the law of commerce in China and the inconsistent quality of the logistics and infrastructure systems. Contracting with subcontractors or manufacturers can cause significant problems which have to be strictly managed. This includes the requirement to ensure that quality is controlled with rigor and the possibility of leakage of products to the domestic and international market production overruns, ethical and socially responsible corporate manufacturing.
What do you need to consider?
There are several ways that foreign companies can manufacture in China. Contract manufacturing is a common option for large as well as small companies across different sectors. Australian firms can also opt to invest directly in factories in China by investing in it as a wholly foreign-owned enterprise or part of an alliance with a Chinese company.
Location is another key consideration when it comes to the injection molding PLA manufacturing industry located in China, with the Chinese Government encouraging investment in various kinds of manufacturing across different regions. On the more developed eastern seaboard, where salaries are higher and the infrastructure is superior The Government encourages investment.
in high-end, low-polluting manufacturing. Further inland in China’s western and central provinces in areas where labour costs are less and infrastructure is less well-developed, the government encourages investment production that is more labour-intensive. Certain provinces and cities specialize in certain areas and are producing particular goods.
Quality control is a key factor to take into account when making a purchase quality control in China. There have been many high prominent instances where poor quality control by Chinese manufacturers , usually subcontractors which has led to significant issues for international brands. This ranges from clothing to toys and food items. Make sure that you have effective quality control procedures implemented in place and perform your due diligence.