For Sale In China Blog

The mistake many people make when engaging manufacturers or buying products in China is to think cheap. Lowest cost-lowest price, discount discount discount. There is a much better alternative and one that traders are not currently exploiting.

For example lets take a pair of shoes. Almost 50% of all the shoes sold in the UK originate in China. Now the costs involved in manufacturing a pair of shoes include the cost of materials, ie. leather, the cost of packaging, the cost of the overhead…rent rates electric etc, the cost of labour & management and of course the cost of shipping. However, think of this……….the labour aspect of the combined costs is probably less than 10%.

So imagine a £10 per of shoes where the labour cost is less than £1. What if you doubled the allowable labour cost and encouraged people to spend twice the time on producing a significantly better quality product. Imagine the craftsmanship and pride people would take in their work and imagine your return on investment for that extra £1 spent. The more labour you can add to a Chinese manufactured product the more value you can add to the eyes of the consumer. China may not yet be full of artisans and fine craftsmen, but will be one day as this approach becomes more prevalent. Companies will begin to invest hugely in skills enabling their workforce to add the quality that Western consumers value. China’s reputation as a low cost producer of mass produced products will change to one of a huge labour force of highly skilled quality manufacturers. Western luxury goods producers should beware and take action now and for those of you in highly skilled low volume production jobs, beware also as the move of manufacture of these products is inevitable.

A similar principle can be applied to almost any product currently manufactured in China. However the principle does not apply to western manufactured products where the labour aspect of costs can often be as high as 30%.

So whether buying or manufacturing in China the rule should be go for expensive, better produced, quality goods with a huge amount of added value. This is where your opportunity for profit will come from and is also likely to differentiate you from the many other operators in China who are still thinking Cheap.

This entry was posted on Wednesday, February 27th, 2008 at 4:45 pm and is filed under China business. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.