If you need to produce in China, will you be better served by a small manufacturer, or by a large one? There is no short answer. It depends on many factors. But one major determinant is the size of your orders relative to their business.
I believe small importers are better off working with factories employing 50 to 500 workers. Very small workshops (below 50 workers) are typically totally disorganized. Large Chinese factories tend to be better structured, but also present many disadvantages:
- They are more expensive than medium-size manufacturers. Their prices are only competitive for very, very large orders.
- They are often present on your market, and they might already sell to your competitors… or to your customers.
- They don’t run any significant risk when they cut corners and you reject production, if your orders represent less than 5% of their business.
- They often end up dictating all the terms in the business relationship with their small customers. They can be very inflexible.
So, how can an importer work with a small Chinese manufacturer?
You certainly know your market’s constraints and requirements much better than the factory does. So you should give them a very precise description of your expectations regarding the product and its packaging.
You might also have to teach them a few things about production. Not only do they need it, but they might accept it if you give them substantial orders (on the opposite, larger manufacturers seldom respond to their small customers’ suggestions).
Two weeks ago I saw an American importer of boxes who had decided to work with a 50-people workshop in Dongguan. He was appalled by the lack of structured processes, and was seriously thinking of sending an engineer on site to prepare jigs, to identify and remove the biggest opportunities for mistakes, and so on.
Difficulty for working directly
English-speaking staff and export licenses are a rarity, especially in workshops under 200 workers.
It means you might have to work through a trading company, or with a local agent. It might be fine, but make sure that (1) you qualify the factory, and (2) that production does not take place anywhere else.
Easy product developments only
Small factories can only reproduce (i.e. “copy”) existing samples or follow very clear technical drawings. As I wrote above, the more details you give them the better.
Don’t try to describe the general concept you have in mind. Chinese suppliers don’t have the same references or the same vision of your market.
A system for early detection of problems
Unfortunately, most small Chinese factories are poorly organized. They regularly make mistakes in production.
It is very important to send an inspector during production. It is a way to monitor production quality, but it is also a tool to help the factory detect issues and correct course… before it is too late!