China has been the de facto source for offshore manufacturing for many years. However, with the current tariff situation, manufacturers are looking at other countries as viable manufacturing sources. Fortunately, highly-experienced liaison companies like ITI Manufacturing can help you find the right offshore factory to manufacture your product. If your company is currently experiencing outsource challenges, or if you are looking for other options or are contemplating offshore manufacturing, keep reading.
Offshore Manufacturing in Vietnam
Over the past three decades, Vietnam has become a major player in the global manufacturing industry. This is in part due to its low labor costs as worker salaries average $6.70 per day. However, it’s substantially lower than China’s $27.50 per day.
Many of the world’s largest manufacturers including Adidas, Canon, Nike, and Samsung find that Vietnam offers a low-cost, high-quality manufacturing environment. The country is a major exporter of apparel, home textiles, footwear, electronics, and furniture.
The Philippine manufacturing sector is the third-largest sector in the country’s economy. The country is also working to make it even bigger. Their Manufacturing Resurgence Program has as a goal to increase manufacturing employment from 10% of the country’s total employment in 2016 to 15% by 2025.
The Philippines’ top manufacturing exports are cosmetics and furniture. Major companies outsourcing manufacturing to the Philippines include Avon and Johnson & Johnson. Factory worker salaries average $5.50 per day.
Taiwan has long been a major source for outsourced manufacturing. Since the country’s labor costs are higher than some competing countries its manufacturing sector tends to specialize in more sophisticated products. For example, Taiwan factories specialize in high-end electrical machinery, computers, technical medical equipment, and automobiles.
In terms of future manufacturing growth, the Taiwanese government’s 5+2 Industrial Innovation Plan targets five key industries: smart machinery, biomedical, Internet of Things, green energy, and defense.
India has long been known for its services sector but is more and more becoming a key player in manufacturing by building on its skilled but affordable labor force. The government’s “Make in India” initiative is designed to increase manufacturing’s share of GDP from the current 16% to 25% by 2022.
India already has developed a strong manufacturing backbone. The India Brand Equity Foundation reported the value of India’s manufacturing sector increased from $300 billion in 2012 to $390 billion in 20181. Companies know India for its production of textiles, electronics, and leather goods. Factory worker salaries in India are less than those in the Philippines, Vietnam, and China, at just $4.86 per day.
Not all outsourcing takes place across the ocean. In the Americas, Brazil has a growing manufacturing industry. Manufacturing accounts for about 20% of Brazil’s GDP and more than 10% of its labor force. Its major exports are automobiles, aircraft, electrical machinery, and chemicals2.
A Thought on the China Tariffs
The disruptive nature of the tariffs placed on imported goods from China has been difficult for everyone. Disruption in the status quo is always a challenge. Unless you are fortunate enough to have a product that is on the exceptions list, the tariffs are staring you square in the face. The only comfort is that every company that you compete with is dealing with the same tariffs. The question is what can you do to mitigate them?
Initially, companies reviewed their duty codes to see if another code would provide some relief. Some companies are simply absorbing as much of the increase as they can. Many are negotiating with all of their suppliers to reduce costs in as many areas as possible. As one business owner said, “Even half a point is something.” Another company director said they were seriously investigating South Korea. He commented that for their particular product if they were going to pay more, they wanted the highest quality they could get.
Viable Options Are Available
So, if your company wants to investigate South Korea or Vietnam, give us a call. We manufacture in both of those countries. Also, if you are manufacturing in China, are continuing to manufacture there, and are not getting the quality, consistency, or cooperation you need, call us. We can manage your existing manufacturing supply chain and GUARANTEE NO MANUFACTURING DEFECTS.
Let ITI Manufacturing Help with Your Company’s Offshore Manufacturing
We have more than 45 years of experience working with manufacturers in Asia. Fortunately, we’re able to use that experience and well-established business relationships with Asian factories to your offshore manufacturing benefit. We’re also confident we can help your company find suppliers, negotiate contracts, and manage the entire manufacturing process to your benefit. So, if you are ready to get started or just have some questions call us to connect with one of our experts.
The call and consulting are free. Also, if your product is right for offshore manufacturing and you want a quote, that is free as well. Call us toll-free at (281) 242-7030.