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Tariffs & Why Manufacturing Location Matters

Tariffs on goods imported into the United States from China has precipitated an unprecedented shift in the consideration of offshore manufacturing location. Some companies are moving away from China due to the net increase in the cost of their Chinese manufactured products. There are, however, many companies making the decision to continue to manufacture in China for various reasons.

This blog will not discuss the details supporting those reasons. However, it will discuss the areas of China that are manufacturing centers for various types of goods. So, if you continue manufacturing in China or want to explore China as your offshore manufacturing country you’ll have information that will help you in determining the area in which to focus your efforts.

Manufacturing in China Today

The tariffs on goods imported from China are dominating discussions but there are still advantages to choosing China as your offshore manufacturing destination. The infrastructure and support industries surrounding the production facilities are some of the best and most efficient in the world.  The availability of a skilled workforce and abundance of raw materials are also a plus.  Less developed countries may be less expensive, but they’re running as fast as they can to catch up and deal with the sudden influx of business inquiries.

There have been questions raised about what will happen to pricing and the ability to ship in some of the “alternate countries” as businesses move their manufacturing there.  Competition results in more efficient pricing but there is concern that knowing China goods will be 25% higher in price will result in opportunity cost increases in other countries.  Companies looking for a solid, reliable offshore location should still get a quote for delivered products from China even if they are considering other countries.  It’s always a good practice to know the FACTS before making a big decision.

China’s Manufacturing Centers

China is a very large country and the different regions and cities there have unique advantages when it comes to manufacturing.  The following is a brief synopsis of the major production centers in China and their specialties.

Electronics

China has several major production centers advantageous for electronics manufacturing. These areas include Shenzhen which features a huge port and has been a key electronics manufacturing base. Shenzhen has also been continuously growing as a special economic zone (SEZ), since the 1980s. As such, Shenzhen produces impressive quantities of computers, electronics, and telecommunications equipment. Tech giants LG and Apple have manufacturing operations in Shenzhen. Guangzhou, about a 2-hour drive to the north, northwest, is also a heavy electronics production area.

Clothing and Textiles

Qingdao is one of China’s leading textile producing areas and is arguably one of the best and most advantageous places to manufacture clothing from. Tianjin is also a top destination for textiles manufacturing as well as mechanics.

Automotive and Heavy Industry

Qingdao is also a significant production center for automotive items. Qingdao also benefits from being a harbor city with direct access to the Yellow Sea.

Shanghai is another major automotive producer in China. Manufacturing is Shanghai’s number one industry and outperforms finance, mobile phone, and microcomputer production. The automotive industry is so thoroughly established in Shanghai that world-automotive leaders General Motors and Volkswagen have factories located there.

Make the Best Decision for Outsourcing

To make the best decision for China offshore manufacturing means choosing the best production facilities. SEZs are incredibly advantageous to do business in. These zones are unique in that they are free of much of the regulatory red tape of the Chinese state which makes them attractive to manufacturers from the United States. SEZs account for 45% of direct foreign investment in China.

To ensure the most advantageous outsourcing program for your company you would do well to contact ITI Manufacturing.  We can help you evaluate your choices.  You may be surprised.  We’ve been negotiating on behalf of our customers since 1974, that’s 45 years this year!

Call 888-574-6823 today and let us help you.

By |2019-06-06T18:25:43-05:00June 5th, 2019|Manufacturing|

About the Author:

Avatar for Mike Stewart
Mike Stewart joined ITI in 2002 and is Vice President of Business Development. He has a BA in Business and Journalism from SFA University. Before joining ITI Mike sold, installed, and trained businesses in comprehensive business computer systems in the medical and automotive industries and served as Executive Vice President of a video news magazine production company.