China is often called the Factory of the World. The reason is that China is the world’s producer manufacturer. In recent years, its value has skyrocketed to an annual sum of $ 4 trillion, of which $ 2.5 trillion was exported. Due to their competitive prices and wide range of products, foreign companies often choose to source from Chinese factories. Let’s dive into the factories in China.
Characteristics of industrial production in China
Industrial production accounts for almost 40% of China’s GDP. Furthermore, China has been one of the top leaders in technology investments in recent years, investing billions of dollars a year. It leads to a tremendous increase in automation through the modernization of production lines and the widespread use of robots in Chinese factories.
The main industries in China include the mining, energy, technology, agriculture, textile and construction industries. Foreign trade plays an important role in China, as China is not only the world’s largest exporter, but also the EU’s largest trading partner. In fact, China’s imports reached 362 billion euros in 2019.
China’s competitive prices are influenced by a variety of different factors, such as:
* Skilled labor combined with relatively low wages, leading to much lower production costs, as well as much shorter production time.
* Highly developed business ecosystem, including supply chains, production infrastructure and components, and technology facilities.
* Weak labor protection laws.
* Chinese fiscal policies are favoring the export of products.
* Access to natural resources in China.
* China’s relatively weak currency, making prices more favorable for foreign customers.
* Automation of production in Chinese factories.
What is produced in factories in China?
No matter what it is, something similar was made in China. In the past, Chinese products were associated with cheap and low-quality items. Today, Chinese factories offer a wide range of high-quality products, ranging from simple products like buttons to more complex machinery and medical devices.
China’s major export industries include:
1. Electronic devices – for example, smartphones, smart watches, computer parts, and small appliances.
2. Mechanical devices and machines, eg drills, car parts.
3. Clothing and footwear – eg fabrics, fast fashion products, accessories.
4. Animal toys and accessories – eg interactive toys, dog beds.
5. Medical devices – for example, specialized medical equipment, pulse oximeters.
Industrial regions in China
China is known for its regional specializations. Specific categories of products are manufactured in factories in close proximity to each other. Makes it much easier to find suppliers in China.
The most developed industrial regions are located in special economic zones created in the 1970s. They were created to improve China’s international trade. These regions include the Pearl River Delta, the Beijing area, and the Yangtze River Delta.
The main industrial regions of China are:
Beijing / Tianjin: automotive, steel, pharmaceutical, petrochemical and technology industries.
* Shanghai: automotive, electronic, textile, steel, medical and financial technologies.
* Suzhou: nanotechnology, biomedical technology and factories of products commissioned by foreign companies.
* Shaoxing / Keqiao – textile industry.
* Ningbo: electronics, clothing, plastic, paper and lighting industries.
* Wenzhou – shoe industry.
* Nanjing: automotive, electronics, energy and steel industries.
* Chengdu / Chongqing: electronics, automotive, machinery and chemical industries
* Guangzhou – Various industries, ranging from toothpicks, textiles, machinery parts to home decorations.
* Foshan – furniture industry.
* Shenzhen – the main center of the electronics and high-tech industries.
The advantages and disadvantages of manufacturing in factories in China
Manufacturing in China has many strengths and weaknesses. The main advantage is China’s highly competitive prices and well-developed infrastructure. The great distance between China and its major trading partners is one of the biggest disadvantages, leading to a variety of different problems.
– Years of experience leading to a well organized production process.
– Lower production costs.
– There is a greater chance that our company will be known internationally.
– Mass manufacturing in short production times.
– A wide selection of factories (China has approximately 2.8 million production plants).
– Long distance, which in most cases leads to a long transit time.
– Language barrier.
– Problems with intellectual property laws in China.
– High MOQ (minimum order quantity) in many factories.
What are OEM and ODM?
OEM and ODM are two terms used to describe a situation where a company outsources production to manufacturers. The difference is mainly in the design process.
In the OEM (Original Equipment Manufacturer) model, a company projects products made by a manufacturer. These goods are normally manufactured according to the designs and specifications provided by the contracting company. The client company thus places its logo on the final product.
In the ODM (Original Design Manufacturer) model, a company designs and manufactures its products, which are sold to other companies. The contracting companies can introduce their modifications in already available projects and then sell them under their brand on the basis of a license. It is also possible to commission a factory to create a specific product and its implementation process as part of an ODM.
You can choose ODM or OEM model; many manufacturers of both types can be found in China.
Trade-related concerns with China
It is obvious that business companies should be aware of scams. Various types of fraud still occur in China on a daily basis. These include, for example, intermediaries who claim to be producers. Although there is a belief that the safest way is to order from large factories, smaller production plants should not be ignored. The best way is to find experienced companies that have all the necessary certificates and documents.
To avoid problems that may arise when dealing with a Chinese business partner, we recommend that you contact us now to take care of all the arrangements for your purchase.