Did you know that some most recognized & reputed brands and companies are sending their production needs overseas? Thousands of companies outsource their production, giving them more time to focus on other aspects of their business. Since China is a significant hub for overseas production, it is not surprising to learn which companies are looking for help overseas.
The unique relationship between Apple and the Chinese manufacturing company Foxconn is not known worldwide. Without this partnership, they would not sell products such as iPhones, iPads, and Macbooks at such reasonable prices. According to an article in 9 To 5 Mac, Foxconn recently broke ground on its first factory in the United States. The plant in Wisconsin will cost nearly $10 billion and hopes to employ thousands of people.
One of the world’s largest sports shoe retailers, Nike is best known for manufacturing footwear and apparel outside the United States. According to a recent blog in the Wall Street Journal, Nike’s founder, Phil Knight, came up with the idea of outsourcing manufacturing jobs to cut costs. Nike, an early adopter of outsourcing, greatly facilitated the growth of its business. China accounts for the largest share of Nike’s manufacturing plants, but the company also has factories in other countries such as Korea, Thailand, and India.
Wal-Mart manufactures most of its products overseas in China. Wal-Mart has more than 10,000 suppliers in China, and in 2002 moved its global outsourcing headquarters from Hong Kong to Shenzhen, China. In 2013, Wal-Mart’s foreign imports from China reached $49 billion.
In 2010, Microsoft signed a three-year contract with Infosys Technologies in Bangalore, India, to build out its internal IT operations. The deal involved 450 unique Microsoft locations in 104 countries. As a result, Infosys has enhanced its technology capabilities by implementing new technologies that are not yet available in the US.
In addition to the companies mentioned above, the following companies are currently outsourcing in Asia.
- Hewlett-Packard Company, Ltd.
- Hewlett-Packard Japan; Hewlett-Packard Japan; Hewlett-Packard PDM Bridge Japan
- Omega Engineering, Inc.
- Hasbro Inc.
- Hector Hebb Bro Bro Omega Inc.
- General Motors Power Systems
Why do companies outsource their manufacturing?
There are many reasons to outsource manufacturing. From reducing labor costs to improving office efficiency, outsourcing companies can differentiate between business success and failure. China remains one of the largest and trusted manufacturing countries in the world, accounting for one-fifth of the global manufacturing market. And, one can easily find many China sourcing agents for their products.
Reduction of labor costs
As mentioned earlier, one of the most important reasons why people choose to outsource production is that they are looking for an easy way to reduce their labor costs. Instead of building a production facility from scratch and hiring employees, it is much easier to outsource the work to an outsourced facility that can do so.
In addition to reducing labor costs, outsourcing can also significantly reduce overhead costs. It’s a great way to rent or buy overseas space at a lower price without worrying about expanding your business.
The ability to expand
By outsourcing the production of new products, you can get them to market faster. Since you don’t have to worry about setting up your factory, buying the right equipment, or hiring employees, your business has room to expand its capabilities.
Improve your focus on your work
If you find it challenging to produce your products in-house, outsourcing is the best option. When you’re busy marketing and promoting your product, using a Chinese or Korean production facility can save you a lot of time, energy, and attention. This way, you can focus on what matters: running your business.
Attracting and retaining top talent
When you expand your manufacturing operations overseas, you’ll have access to talent that you can’t just find in the US. For example, if you need someone specializing in manufacturing sporting goods, you may find a company overseas that manufactures tennis rackets, hockey sticks, volleyball nets, etc.
High-quality products and materials at low prices
When you buy products and materials from China, you can get them at a fraction of the price you would pay in the United States. In addition, some factories in China offer discounted prices for large orders.
As you can read in this blog, there are many reasons to consider outsourcing production. Although outsourcing is often a controversial topic, hundreds of companies in the United States benefit from outsourcing. Whether your product is complex or straightforward, a good global sourcing company can help you find a manufacturing facility that meets your needs and budget.