Chinese manufacturers feel the pressure of competition. Those based in Guangdong are up against the lower costs of other provinces. And, in certain industries, they all face the lowest costs of Vietnam, Bangladesh, Pakistan…
A new article from Global Sources (Guangdong suppliers emphasize OBM, R&D to maintain competitive edge) relates the strategies of a few manufacturers for maintaining their profits:
Pushing their own brand
To stand out from their competitors, many manufacturers are promoting their own brands.
For example, Acever Electronics (Shenzhen), an electronics products supplier, offers a discount of 10% to 15% to customers using the company’s in-house Acever brand. The company has also begun to sell products under its own brand directly to customers in overseas markets.
Investing in R&D to offer unique products
Currently, industry challenges such as rising production costs, low demand in key export markets and a rising yuan are pushing Guangdong manufacturers to upgrade R&D in the struggle to maintain profits.
Likewise, LED grow light supplier Blue Sea Lighting is enhancing its products to match the different growing patterns of different plants. According to the manufacturer, focusing on this niche boosts its competitiveness.
Better organizing their operations
A growing number of SMEs in the province are moving to ERP (Enterprise Resource Planning) systems in order to streamline management and production systems.
Security products manufacturer, Ocean Electric has cut costs, boosted efficiency and avoided unnecessary procedures since it implemented an ERP system.
Purchasing equipment locally instead of importing it
Leading LED manufacturer, Neo-Neon LED Lighting International is developing a production line in cooperation with the equipment supplier Kejie Machinery Automation. The LED supplier thinks it can lower export prices dramatically by using local welding and packaging machines.
Currently, most LED production machinery is imported from Singapore and Europe.
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These suppliers are on the right path, but they could do much more.
I always wonder, how don’t Chinese manufacturers know that following the Toyota model can double their labor productivity?
Or maybe, the real question is: are they ready to pay attention to their processes and to work smarter?
Renaud, your comment on labor productivity is small part of your post, but very important in my perspective. Over the last 2 years I have visited many factories in China and have noticed that there is a lot of room for labor productivity. These factories are run by smart managers and I know they see the same thing I see. These factory owners know they can achieve more productivity. The big question is why don’t they pursue productivity options?