GUEST BLOG: Three things you need to know about outsourcing to China

There are many benefits to outsourcing your high-quality metal or plastics manufacturing to another country such as China or Vietnam but there are many potential pitfalls too.

There isn’t space here to go into all the details but here are three essential things you need to think about before considering outsourcing to a foreign nation.

1.    Make sure you understand the country

Every country has its own ways of doing business and you really need to go into any commercial relationship with as great a familiarity as possible with specific beliefs, cultures and modus operandi of the people you will be working with. Understanding the country can also involve getting to grips with the financial side of things – do you understand China’s VAT system, for example, or its export tax and delivery terms? Do you even know the current exchange rate? Do you know whether the country is undergoing a period of economic growth or is it in stagnation… or even decline? And precisely what is happening on the ground?

2.    What is the country’s relationship with the UK like?

Obviously, it doesn’t make business sense to be working closely with a country if there is a fractious relationship with the UK. Even though relations with China and Vietnam are perfectly cordial, you still need to be communicating with the UK Foreign Office and UK Trade & Investment as well as the British Chamber of Commerce. You also need to be able to speak the local language – or at least have someone representing you who can.

3.    What kind of sourcing do you want or need?

Outsourcing is outsourcing, right? No. You can have non-contact sourcing, which is fairly self-explanatory, or semi-contact sourcing or you can deal with the country through a separate sourcing company such as ChinaSavvy or VietSavvy. You can also connect via a sub-contract manufacturer or set up your own representative office. Do you want to be involved in the final quality checks and inspections, who is going to carry out all quality audits, and who is going to draw up the contracts and manage purchase orders, invoices and payments?

Of course – just as there would be if you were selecting a sub-contractor in the UK – there are plenty more key issues that you must take into consideration, not least the quality and skills of the engineers who will be working on your customers’ products. Is it possible to make the parts in places where costs are even lower than in China – such as Vietnam – without compromising on quality and while still taking advantage of China’s incredible engineering supply chain? Are you in a position to make an informed decision?

Lots of things to ponder, then, before you take the plunge!

This post was written by Christopher Devereux, managing director of ChinaSavvy HK and vice chairman of the British Chamber of Commerce, Guangdong, China. Find out more at www.chinasavvy.com, Twitter @Chinasavvy1, Facebook @Chinasavvy or LinkedIn.

China Savvy is exhibiting at Subcon next week - register now for free at www.subconshow.co,ukregister 

T minus 10 and counting...

T MINUS 10 AND COUNTING: ORGANISERS PREPARE FOR A BUMPER YEAR AT SUBCON

With just 10 days to go until the doors open at Subcon, the defining event in the manufacturing supply chain calendar, organisers have revealed they are preparing for a bumper year with over 400 exhibitors confirmed and 4,500 visitors expected through the doors...

This year visitors will enjoy two shows - Subcon and brand new sister event The Engineer Expo. Furthermore, a cornerstone of the expanded event will be The Engineer Conference with 36 free-to-attend sessions across two theatres.

Rolls Royce CTO Paul Stein will present the keynote within a highly-anticipated programme that also features Dr Caroline Hargrove, CTO of McLaren Applied Technologies, BAE Systems’ Dr Henry White, Dr Nadine Stech who helped to design Linx, the CTO of Fujitsu UK Graeme Wright, the AMRC’s head of digital Prof Rab Scott, Prof Dame Jane Jiang, who heads up the EPSRC’s Future Metrology hub at the University of Huddersfield and Prof Rajkumar Roy, Director of Manufacturing, Cranfield University.

These free to attend presentations will showcase cutting edge innovation and best practice from the worlds of engineering, manufacturing and supply chain management.

“There is going to be so much to talk about this year: from our research into the ignorance around Industry 4.0 and the importance of increasing the number of women in manufacturing and engineering leadership roles, to the incredible presentations across our stages and discussions throughout the stands of more than 400 exhibitors,” commented Subcon event director Gordon Kirk. 

“This year’s event, which also debuts The Engineer Expo and The Engineer Conference, is set to be our best yet and will give visitors and suppliers an unrivalled opportunity to interact with every facet of the UK manufacturing and engineering community, maintain their competitive edge, and shape how the industry is seen from the outside.”

As always, to register your attendance for free, please visit www.subconshow.co.uk

Quarter of manufacturing companies plan to appoint subcontractors in next 12 months

Subcon, the UK’s only dedicated event for subcontract manufacturing returns to the NEC, Birmingham, next week with the manufacturing sector on a high and looking for new suppliers.

The latest research by Subcon shows that 23% of companies plan to appoint new subcontractors in the next 12 months. And with 400 exhibitors from all sectors and across all technologies, Subcon 2017 will provide visitors with the ideal opportunity to get face to face with potential suppliers.

With companies having to keep a clear strategic focus on their core competencies, the trend towards outsourcing some or all manufacturing processes is accelerating.

According to the survey, the key reasons for subcontracting manufacturing processes rather than carrying them out in-house were: only wanting to focus on core competencies (47%), not having enough capacity in-house (45%) and gaining access to processes (41%) and expertise (38%) they don’t have themselves.

According to the survey results, 15% of manufacturers have increased the amount of work they place with subcontractors in the past 12 months and 20% expect to increase it further in the coming year.

This is good news for UK manufacturing as 10% of companies asked had re-shored work to the UK in the past 12 months and 27% expected the proportion of work placed with UK suppliers to increase in the next three years. The key factors here were quality (71%), logistical considerations (59%), response time (46%) and cost (46%).

Subcon 2017 runs from 6 to 8 June alongside The Advanced Manufacturing Show and The Engineer Design & Innovation Show. Together the three shows cover the complete manufacturing cycle from concept to component, bringing together design engineering, product development, in-house production and outsourced supply chains.

Subcon is the UK’s only event dedicated to outsourced manufacturing. It serves all sectors and all processes – from machining, sheet metalworking, casting and forging, to plastic moulding, composites and electronics.

The Advanced Manufacturing Show covers every aspect of production technology. including machine tools, workholding and accessories, software, additive manufacturing and metrology. Exhibitors including XYZ Machine Tools, Hurco, Renishaw, Hexagon Manufacturing Intelligence, Autodesk, Faro and 1^st MTA.

The third piece in the jigsaw is The Engineer Design and Innovation Show. This offers everything a design engineer needs to create innovative new products – from CAD and simulation software to prototyping and components. Exhibitors include Bowman Additive Manufacturing, Laser Lines, Johnson Matthey, Ricoh Imaging and Schunk Intec.

Complementing the shows, two free-to-attend conference streams will address key industry issues including additive manufacturing, Industry 4.0, the Apprenticeship Levy and lightweight components.

Subcon event director Gordon Kirk said: “To succeed in volatile and keenly competitive markets, manufacturers are increasingly focusing on what they do best. This means working with subcontract manufacturing partners who are experts at what they do, have access to the latest technology and possess unique know-how. Subcon is the ideal opportunity for them to find the right suppliers for their outsourcing requirement.

“At the same time, the Advanced Manufacturing Show and The Engineer Design and Innovation Show give them access to the design and production tools that are vital to their core operations. Together, the three shows are an unmissable proposition for UK manufacturers.”

Register now to attend at www.subconshow.co.uk , www.advancedmanufacturingshow.co.uk and www.theengineer-designinnovationshow.co.uk .