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Home >> Services & Industries >> Product Sourcing >> Why Outsource to China |
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WHY OUTSOURCE TO CHINA |
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Quantity and Diversity
Cost
Quality |
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Quantity and Diversity
Over the past 15 years, China's exports have jumped more than tenfold, far exceeding the tripling of world trade that has taken place over the same period.
Growth in exports places China at 2nd place in exports in 2007. Export increases are led by low labor costs, low commercial rents, and the increase in foreign demand.
Agriculture-Up 15% annually since 2005.
 Manufacturing- Ranked 4th globally.
Non ferrous metal -1st in the world.
Machinery - 3rd largest in exports globally.
Communication products -1st since 2005, up 28.2% annually.
Textile/Garments-2 Trillion Yuan in sales in 2005. Up 26.29% annually.
Household Appliances- Exports to 216 countries in the world. Europe (33%) and North America (27%)
Ceramic industry - World¡¯s largest producer and consumer, accounts for of the world¡¯s total.
China's trade with the rest of the world rose over 400% from $281 billion in 1995 to over $1.5 trillion in 2005. Strong trade relationships have stood out to benefit both China and its global trade partners.
Cost
Prior research shows that export prices have continued to decrease within the past decade due to decreasing costs in labor and manufacturing. Thus, sourcing from China has always been a means to cut costs.
Domestic raw material prices in Chinahave always been lower than international prices within the past 7 years.
China¡¯s hourly compensation continues to be a small fraction of that found in the US and developed Western countries.
Average hourly compensation costs for China¡¯s manufacturing sector remain around $0.81/hour, 2.7% of employees in the US.
Investigation and analysis over 40,000 companies in different sectors showed China¡¯s productivity remains one of the cost advantages when compared to developed countries or with low cost countries such as India and Vietnam.
Labor productivity, which measures the efficiency of labor cost per capita, shows that that China¡¯s maximized utilization of resources places China first among developing and developed countries.
Manufacturing and the logistics market remain China¡¯s fastest growing sectors as international investors expand across the country.
Low commercial rent for manufacturing allows companies and investors to move into China to retain their comparative advantage in terms of outsourcing and offshoring.
Quality
Chinese enterprises and government associations continue expenditures on R &D to enhance quality of products produced within China.
From 2005-2008, R&D expenditure remain over 250 Billion Yuan, increasing over 20% each year.
The Government has attached great importance to the development of logistics. Since 2006, the total value of logics remains over 60 trillion Yuan, growing over 20% each year.
The government¡¯s expenditure on science and Technology remain over 100 Billion Yuan each year, increasing by over 25% annually since 2006.
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