June 30, 2022

Moving manufacturing from China to Mexico

Making the decision to outsource the production of your product can be a daunting prospect. Whether you’re concerned about the risks involved in dealing with Chinese suppliers, worried about trusting someone else with your IP or are simply concerned with navigating the seemingly endless rules that govern imports and exports, it’s important to ask yourself why you want to make the move and what you’re looking for in a production partner – it’s our hope that in this short article we can help address these concerns so that you can take the next step in confidence.

The first step is to take a wider view and consider the numbers. The first factor is the rising cost of labor in China, and the raw materials associated with making your product. Chinese workers have, historically, been quite cheap compared to competition on the global market but due to a number of factors this figure has increased erratically over the past decade. As of 2020, the average Chinese manufacturing wage sits at $5.50 per hour, which is actually a dollar more than their Mexican counterparts, and on top of this raw materials have been increasing in price in a similar way, driving up the overall cost of base production in China. Comparatively, Mexico offers US companies the opportunity to provide their own materials without paying import fees through the IMMEX program, allowing American companies to directly source their own for the best price. Transport is also a concern, as you need to factor in not just the cost of shipping a container across the Pacific, but also the lead time involved. Shipping a container across the US-Mexico border can be about a third of the cost, and the process itself is much simpler and a lot faster thanks on both counts to the USMCA agreement and the IMMEX program.

The second factor to consider is the quality of the end product. Chinese manufacturing has for a long time been associated with high volume and low quality – while there are many manufacturers who produce quality products and operate in good faith, there are many others who look at American companies as an easy target. Horror stories are abundant if you look for them – over-promising and under-delivering, products being made wrong or using shoddy materials, IP theft, the list goes on, and when it’s your reputation on the line these risks can simply be too much of a cost to bear. Thanks to the ongoing relationship not just between governments but also between Mexico and some of the world’s leading companies, you’ll be able to access a highly skilled workforce that utilizes cutting edge production technologies, making concerns about low-quality manufacturing a thing of the past. The trade agreement between the United States and Mexico, first signed as NAFTA and currently the USMCA, was the first of its kind to include robust IP protection, giving you an effective guarantee that your product will remain your property and in addition to this, by working with us you’ll have access to a hand-picked list of vetted factories that we guarantee will operate in good faith and adhere to the highest standards.

The final point is more of a cultural one – many people are bilingual in Mexico, particularly along the border states, making the mundane process of ordering and shipping much smoother. A lot of companies operating in these areas work on Pacific Standard Time too, so if you’re on the west coast you won’t have to calculate any difference, and for businesses elsewhere in the US calculating domestic time zones is a familiar process and one that is much simpler to work with than the 12-15 hour difference between the US and China. It’s also important to factor in the growing political tensions between the US and China, and the constant risk of trade war tariffs and other barriers. The unfortunate reality is that all signs point to these problems getting worse, and the risky prospect of product seizures or unexpected fines and levies creates a lot of uncertainty that you don’t need when you’re focused on a growing business. While our relationship with Mexico isn’t perfect, the trade between us is backed by an ironclad guarantee that helps foster a steady, reliable and friendly business environment.

So if you’re as excited as we are about the future of the manufacturing industry, then we want to help. We have everything you need to outsource production to Mexico from hand-picked and vetted factories to a platform that allows you to manage the entire process in one place. If you’re interested in growing your business with the help of the world’s next manufacturing powerhouse, why not click here to find out more?

Posted by uber for Zipfox News
Category: Zipfox News

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