China is the world’s largest manufacturer, often referred to as ‘the world’s factory’. It is currently the only country in the world with a full industrial chain according to the latest United Nations Industrial Classification categories.
China has become a preferred destination for the relocation of many global manufacturing facilities. Reducing restrictions on foreign investment in manufacturing, low labour cost, technically skilled workforce, good infrastructure has contributed to this preference.
In recent years, businesses are increasingly choosing to manufacture in China to service the growing Chinese market, rather than use it as a low-cost option to manufacture export items.
There are several ways for foreign businesses to go about manufacturing in China. Contract manufacturing is a popular option for both large and small businesses across various industries.
Location is another key consideration for manufacturing in China, with the Chinese Government encouraging investment in different types of manufacturing in different regions.
Some cities and provinces specialize in certain industries and producing specific goods. Many industries in China have formed industrial chain clusters in various regions. These clusters are formed under the huge demand from the Chinese domestic market. Mature industrial chain clusters can effectively improve production efficiency and reduce procurement costs.
Quality control is an important consideration when choosing to manufacture in China. To avoid problems, introduce robust quality control mechanisms regularly and perform due diligence.