When you are new to importing and looking for the best offshore manufacturer to get your production job done well, you may be confused about when & where to start. India and China are two of the most popular destinations for manufacturing goods at affordable prices. But before you take the cost-effective option or the one that promises to deliver on stipulated time, carefully assess your options by taking into consideration various external factors that will have an impact on your supply chain management.
1. Pricing
When it comes to manufacturing goods, money is not the only thing that matters to you. In addition to money reliability, quality, and timing are also equally important. However, production costs are crucial when outsourcing to different countries. In most of the cases, China takes the lead when it comes to more competitive pricing, for a plethora of reasons. One of the main factors in rising costs in India is that its electricity is limited and expensive. Not only is the cost of operating a manufacturing plant, but the available hours in order to operate it are also lower than that of China. Adding to this, lots of red bureaucratic tape, the high (and often less productive) work are also a big problem. In all these parameters, you might find a better deal in China. However, many Indian federal officials are trying to entice more manufacturing to the country and therefore could turn the tables in the future.
2. Logistics services
India and China vary greatly when it comes to transportation and logistics. Whether you want to fetch raw materials for production or export a finished product, India relies heavily on its road network. Although, they are not always well paved enough to accommodate a large truck comfortably, which increases the likelihood of a slowdown in the logistics process.
Depending on the location of the factory, the time between the factory and the infrastructure may take much longer than in China. On the upside, the government is steadily investing in the development of highways, railways, ports, and airports across the country in order to help create a manufacturing economy, which has been introduced in India. KPMG report. In fact, transportation costs and time are expected to be reduced by 20%. In China, there are a plethora of logistics centers to benefit from, including new highways, roads, waterways, railways, and airports. Transport and other factors are also considered in the annual logistics performance index of the World Bank. In the year 2016, China ranked 27th in the world, as compared to India which was in the 35th position.
Economic environment
New reforms on regulatory authority from the Indian government led to a less complex tax structure. The recently launched GST is restructuring the tax structure of India in an effort to simplify the entire process. In addition to this, efficiency is expected in order to increase in all areas. On the other hand, China is facing slow economic growth. The past months have seen a slight increase in the major indices, although the last quarter has seen the economic growth of 1.7% as compared to 1.3% predicted. With this rate, the country may see annual growth for the first time since the year 2010.
Wrapping Up: No doubt, outsourcing your manufacturing process to India or China is a good idea. But, you should keep the above factors in mind in order to save your time and cost. On the other hand, many manufacturers choose third party inspection companies to get their manufactured product checked in order to ensure maximum quality in their products.
