The Four Levels of Plastic Injection Molding Suppliers in China

Have ever sent a RFQ for plastic parts? Have you been surprised by the wide disparity of the quotes from plastic injection molding suppliers in China?

Asking these suppliers for quotations can be highly confusing. The prices of molds can differ by a factor from 1 to 10, and prices for production of plastic parts also differ a lot.

Why does it differ so much? I think there are two major factors at play…

1. Different levels of plastic suppliers

First, not all plastic suppliers are created equal. There are actually pretty striking differences between them.

Based on our experiences in that field, we can distinguish 4 levels of suppliers, as summarized below…

Now, let’s look at these 4 levels one by one.

Level 1 plastic injection molding suppliers

They generally:

• Outsource the mold design work. (The problem is, ensuring that the mold structure is adequate and reliable is extremely important, but they don’t control that.)
• Do little to no DFM review before fabricating tooling, which means a lot of issues are discovered later, typically in the first trials.
• Use soft steel unless otherwise specified (which means inexperienced customers are happy with the price until they realize they will need to pay for a new mold soon).
• Often outsource most (or all) of the mold machining, which means there is less control of timelines, not to mention quality.
• Can only communicate in Chinese and work for local companies.
• Give up relatively quickly in case the parts coming from their trials are rejected several times by the customer. There is no reimbursement.

To give you some idea of the scale and setup of these level 1 fabrication shops, look at a few local shops in Dongguan (a very prominent machining and tooling location in South China) that specialize in selling blocks of steel, doing CNC milling, doing EDM machining, etc. These small machining shops are often family-run businesses situated in residential areas, sometimes with apartments directly above(!):

In short, most overseas buyers want to avoid those plastic suppliers. The problem is, that their direct suppliers (which assemble the product) are usually not transparent about who makes the molds and the plastic parts, and are often under strong pricing pressure, which means you may have a few ‘level 1’ shops in your supply chain…

Level 2 plastic injection molding suppliers

These kinds of suppliers broadly:

• Sometimes outsource mold design and key machining processes.
• Lack specialized technicians for critical processes, for example they might do EDM machining but it is done by people without related experience.
• Sometimes has a few English-speaking salespeople, typically non-technical.
• Sometimes have no choice but to give up in case the parts coming from their trials are rejected several times by the customer. There is usually no way to get reimbursed in that case, and the customer has wasted several months. It doesn’t happen very often, but we have seen that in several projects.

I believe most plastic suppliers in the Dongguan/Shenzhen area are between levels 1 and 2. And most of those in the Ningbo area are between, say, 1 and 1.5. I may be wrong, but those have been my experiences.

A lot of purchasers receive junk emails and LinkedIn messages from plastic mold suppliers, and I’d bet over 80% of them are ‘level 2’.

Level 3 plastic injection molding suppliers

They are normally a better fit if the product design comes with higher dimensional or aesthetic requirements. It is also a better choice if the part geometry calls for a more highly-engineered mold — but most buyers are unable to recognize when that’s the case.

Let’s take an example. A ‘level 2’ supplier might decide to make 1 mold for 3 separate parts. It is technically possible. It is a smart approach to cut costs. However, it comes with a trade-off they usually don’t clarify upfront (remember, their DFM is quite basic or even non-existent). In some cases, the customer will point to a defect in one of those parts, but the plastic supplier will be forced to use the exact same injection parameters for all those parts. Fixing one defect here may lead to another defect appearing somewhere else.

The structure of a mold, for the same part, can be kept relatively simple or made relatively complex. The types of gates, the use of hot runners, and many other elements can make for a better result, but many buyers have no idea about those concepts.

And, to reiterate an important point: if precision and overall appearance aren’t critical for the project, level 2 is often fine for consumer or B2B products, especially if the budget is tight.

Level 4 plastic injection molding suppliers

These suppliers tend to handle high-volume, high-quality plastic production.

Here are a few examples of such plastic workshops I have seen first-hand:

• Miele in Dongguan (final product: vacuum cleaners that come with a 20-year warranty)
• Mattel in Foshan (final product: various types of articulated toys)
• Silver Basis (final product: parts of a compact car assembled in France under a Japanese brand) — yes, of course, there are now ‘level 4’ Chinese companies and their pricing is not low.

And it is typically the type of supplier Apple uses. If you haven’t heard Tim Cook and his admiration for China’s deep skills when it comes to tooling, watch this video.

If you plan to make very large production runs, and you need the molds to be made under international standards for easy transfer to, say, Mexico or Poland, you usually need to look at this level… or maybe ‘level 3’, but no lower.

2. Different approaches to getting business

Let’s get back to the original question: why are quotations from plastic suppliers so widely distributed?

As I explained above, different suppliers can work at extremely different levels of sophistication. But there is one more factor that muddies the water quite a bit. Different types of tooling suppliers employ different pricing strategies.

Level 1 and level 2 suppliers often agree to reduce the price of tooling artificially and to amortize it by adding it to the price of production. Remember, their general objective is to keep the molds simple — often ‘as simple as they can get away with’. And they often outsource a part of the process, too.

But is that in the buyer’s interest? There are pros and cons.

On the one hand, some buyers really don’t have the means to finance the tooling, and it’s an opportunity to get into mass production with a lower investment.

On the other hand, I have seen a few serious downsides with this approach:

• If the production volumes are high, the buyer ends up paying far more in the long run
• The supplier does not release the tooling design files and will request a substantial extra payment before releasing the tooling (which may be poorly designed, to the point where a new mold may have to be fabricated anyway)
• The supplier sometimes believes the mold is partly their property and they can be tempted to show the parts to other companies and use the existing mold for those other customers

Now, what if you see a quotation where both the mold cost and the plastic products/components cost are very low? Here is what comes to my mind:

• A ‘level 1’ supplier is probably involved.
• They may have made mistakes and they will realize later that they need to charge more (be ready for that).
• Their tooling may be scrapped after the initial trials, once they realize its results are not acceptable, and they might push you to pay for a new set of molds…

In general, that’s not a good sign!

As a rule, as a customer, you need to keep in mind that many Chinese companies routinely do some engineering for free, but keep some intellectual property. If you’d like to read more about that, please see the description of the “Chinese model” in China Product Development Models and Risks.

In summary

Over the past 40 years, China has developed several mold manufacturing hubs — historically in the Dongguan area, but also in the Ningbo area — and has become the leader in high-volume plastic production.

Why? Because Chinese plastic suppliers enjoy a clear competitive advantage in the production of many types of products. Local molds are made at roughly half the price and twice the speed when compared to Europe or North America.

However, picking the right injection molding supplier is fraught with risk for buyers who don’t understand what the market is made of and what business strategies of various players. ‘Getting the tooling back’ and ‘fixing some quality issues on plastic parts’ are some of the most common topics of customer-supplier disputes. If anything, we hear more and more about those types of disputes.

So, make sure you work with the right type of supplier. Not every plastic injection molding factory out there is a good fit for your project, no matter how attractive their prices are.