Despite India and Pakistan encroaching on its market share, China remains the preeminent outsourcing solution for US-based companies. In fact, it is still the dominant market player when companies look to reduce production costs on finished goods. However, it’s wrong to assume that China is atop the world simply because of its low labor rates. There are other factors to consider, ones that contribute to China manufacturing leading the way in rapid prototyping of new designs, and in China being the first choice when looking to outsource large-scale production of components, sub-components and industrial finished goods. In fact, one area where China manufacturing excels is in the production of plastic components and sub-components.
Chinese Manufacturing Dominance
Again, most assume that Chinese manufacturing is dominant simply due to its incredibly low labor rates. However, as previously mentioned, there are other factors to consider, especially when it comes to plastic finished goods. First, upwards of 70 percent of the world’s plastic recycling is shipped directly to China. This allows China to dominate another critical factor of production; plastic raw material costs are extremely low in China due to its dominance as an immediate outlet for recycled plastic. Second, not only is recycled plastic less expensive (and better for the environment) than virgin plastic, but the fact that China dominates the market for recycled plastic affords it the opportunity to secure raw material pricing no other country can match.
Third, the quality of plastic finished goods has steadily improved as China has been known to reject unclean imported recycled plastic. This guarantees that only the highest grade of recycled plastic is used as a feedstock in Chinese production. This position of dominance is critical to reducing rejects and defects in manufacturing. In addition, Chinese manufacturing has drastically improved overall in the past two decades. Producers have focused on improving quality, lowering manufacturing cycle times, reducing waste and eliminating downtime caused by work stoppages.
All of these aforementioned benefits mean Chinese manufacturing is quickly gaining ground on its western counterparts in terms of production throughput. Therefore, not only is China preferred due to its lower labor rates, and lower costs of materials, but it’s also preferred because its efficiency and productivity rates have improved considerably over the years.
Future of Chinese Manufacturing
Last, but certainly not least, the cost of freight has steadily decreased over the past year due to lower transportation costs. This is due to the current price of crude oil fluctuating in and around $50.00 a barrel. With manufacturing and material costs extremely low, coupled with low freight costs, it’s no wonder more companies are turning to China to outsource their manufacturing of plastic finished goods.
American companies need short lead times on multiple plastic parts in order to shorten their own product to market lead times. China’s ability to provide a turnkey solution to prototype production is critical for US-based companies. Whether it is needing automotive and electronic parts made from acrylonitrile butadiene styrene (ABS), rigid assemblies such as corrosion resistant piping made high-density polyethylene (HDPE), flexible prototypes from low-density polyethylene (LPDE), or even lenses and mirrors made from optical grade polycarbonate resin, China still remains the ideal source when looking to reduce plastic component pricing.
Besides the costs, there are a myriad of other reasons why it makes sense for many organizations to outsource their manufacturing to China. For more information about these reason and to see if Chinese manufacturing could be the right solution, contact ITI Manufacturing and start profiting from the many benefits of outsourcing your manufacturing needs through ITI Manufacturing.