Sourcing and Manufacturing Products in Asia – What You Need to Know

November 17, 2022

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Sourcing and Manufacturing Products in Asia – What You Need to Know | One Link Holdings

Find out what you need to know about sourcing and manufacturing products in Asia, including the pros and cons of the region.

Asia is the world’s largest and most populous continent, making it an attractive target for businesses looking to source or manufacture products. Asia has become a manufacturing powerhouse in recent years, with countries like China sometimes being referred to as the manufacturing capital of the world. Countries like Vietnam, India, Malaysia, Thailand (to name a few) are now gaining momentum in their own rights as manufacturing powerhouses. There are several factors to consider when sourcing or manufacturing products in Asia, including cost, quality, lead time, and logistics. In this blog post, we will take a closer look at each of these factors to help you make the best decision for your business.

Cost

When it comes to cost, Asia is typically much more competitive in price when compared with North America or Europe. Labour costs are lower and there are various government incentives offered to businesses, making it an attractive option for companies looking to save money. However, it is important to note that there can be hidden costs associated with doing business in Asia and it is important to understand the business landscape and those you are doing business with. It is important due diligence is carried out before committing to any agreements, companies such as SGS offer a number of services which may help you mitigate these risks.

Political instability and natural disasters can also disrupt the manufacturing process which may lead to higher costs. There may be some hidden costs involved at various stages throughout the supply chain, it is important your agreement and contract with the manufacturer covers you from any hidden, additional charges.

Quality

Over the years Asian manufacturers have improved greatly improved the quality of their products, this has come off the back of higher quality raw materials, extensive knowledge (being the worlds factory), a more skilled work force and the understanding that quality is most important. Additionally, many Asian manufacturers are willing to invest in new technology and processes in order to meet the demands of their Western customers.

Having said that if the importance in quality is not monitored closely you will be more likely to see quality issues with your products. There are a number of measures you can take to ensure the quality of your products such as the following:

Factory audit and due diligence
Pre production raw material quality check
During production quality check
Post production quality inspection
Pre loading accountability report

It is important you use a reputable or trusted company who will act in best interests and not that of the factory.

Lead Time

One of the biggest concerns for companies sourcing or manufacturing products in Asia is lead time. Lead time is the total time from when the order is placed to when its shipped. Lead time can vary depending on the product, the country and the manufacturing process. Because most Asian countries are located across the globe from North America or Europe, shipping times can be long and uncertain. Additionally, time zones can create communication difficulties and slow down the decision-making process. While lead times can be a challenge, they can typically be managed through careful planning and coordination with your suppliers. Some factors to keep in mind when discussing lead time:

Production lead time is different to freight lead time
Some factories may refer to lead time only on business/ working days
There are a high amount of public holidays in Asia
Peak/ busy times of the year
Freight lead time is very hard to control and is sometimes out of your freight forwarders control

Lead times should be specified in your supply agreements to avoid factories putting other customers production ahead of the line, while during production quality control checks can confirm where the factory is at with production.

Logistics

Another important consideration when sourcing or manufacturing products in Asia is logistics. Many Asian countries do not have developed transportation infrastructure, which can make it difficult to get goods to market. Asian countries are often thousands of miles from the end user, which can increase shipping costs and lead to longer delivery times. Additionally, customs regulations can vary from country to country, making it important to work with a reputable logistics partner who has experience shipping to and from Asia.

Asia offers several advantages for companies looking to source or manufacture products, including lower costs, high quality, and access to a large market. However, there are also a few challenges associated with doing business in Asia, such as long lead times and logistical difficulties. When sourcing or manufacturing products in Asia, it is important to carefully consider all the factors involved in order to make the best decision for your business.

Contact One Link Holdings if you would like to use Asia for sourcing and manufacturing your products. We are highly experienced in dealing with Asian factories, ensuring a smooth ‘end to end’ process for your business.

Written By

One Link Holding team

With our experience it puts us in a very unique position in being able to take your business from idea to reality, or if you’re part of the way there we can help with a number of individual areas in your business.