picture of manufacturing in China

The Status of Chinese Contract Manufacturing Companies

Where were China contract manufacturers from?

Many people are so curious of why there are so many contract manufacturing companies in China? Where were they from?

Yes, it’s a good question. As we know, Since 1970’s, China has opened the door to take the manufacturing role from Europe and US countries because its low lobar cost. Many foreign companies, HongKong companies as well as Taiwanese companies invested factories in China and started business for contract manufacturing or OEM manufacturing business. It attracted lots of job hunters to join in. Many people come to factory to work and learn industry technology. Perhaps most of them are only learners and ordinate workers at the very beginning. However they gradually mastered lots of special skills or technology. More and more workers, engineers, or managers quit their job and set up their own business. Since they are hardworking and aggressive in business, those people built big advantage in their own markets. After lot of years’ development, more and more people were willing to do their own business instead of working for others. This is why there are so many manufacturing companies in China.


Where are majority of Chinese contract manufacturing companies located?

In China, most of companies are located in Eastern China and Southern China, like Shanghai, Zhejiang, and GuangDong provinces.(Shenzhen, DongGuang, Foshan…). Because these area coast cities with very convenient transportation. Even though there are lots of different level contract manufacturers, relatively to say, the contract manufacturers in Eastern China offer cheaper prices but lower quality, and contract manufacturers in Southern China(Shenzhen, DongGuang, Foshan) provide much higher quality product than Eastern manufacturers. Perhaps you had some experience in working those different manufacturers. If you look for high quality service, we still suggest you work with Southern manufacturers in China.


Have Chinese contract manufacturers lost their advantage to survive?

It’s a common sense that China has dramatically increased the manufacturing cost in recent years, especially in local tax, employee salary, and estate renting. Many manufacturing companies were force to move their manufacturing facility from high cost region to other cheap cities. This is only to save manufacturing cost. Some of foreign manufacturing companies has even moved to other Asian countries. Like Vietnam, India, or Thailand…

Many foreign business men think China contract manufacturing companies has lost their advantage at low labor cost. They attempted to work with other Asian contract manufacturers, however they found China is still the best place for manufacturing. Because those Asian countries do no have mature supply chain and environment for manufacturing even their lobar cost is cheaper than China.


Will other Asian manufacturers replace China contract manufacturers?

As just mentioned above, even though China has increased a lots a manufacturing cost, but it still have a big advantage for OEM manufacturing and custom manufacturing. Here below are some main reasons:

  1. China has very mature supply chain, you can find any type of manufacturers and resources easily.
  2. You can find all kind of technical people that works for your project from design to manufacturing.
  3. China has convenient transportation for international logistic service, you can get your goods in few days after it’s shipped.
  4. Chinese workers are very hardworking and responsible for job.

However compared to China manufacturers, other Asian manufacturers have poor manufacturing environment, for example, the government policy is not steady, workers are very lazy, different to find right people. Although some foreign companies has set up their factories in those Asian countries, but they have headache problem for daily running and management. Perhaps they will finally move to China again. Therefore we believe, in the coming 10~20 years, China is still the best place for OEM and contract manufacturing services.