How to Protect Your Investment when Manufacturing Overseas

Manufacturing overseas can be quite profitable, especially if your overseas partner happens to be located in China. Chinese business infrastructure is perfect for accommodating huge orders in bulk and at cheaper rates than anyone else can. However, irrespective of whether you are manufacturing in China or India, there are risks, and taking measures to mitigate those risks is necessary.

Manufacturing overseas image 4994994Verification is Essential, Not Optional

It’s not uncommon for outside middlemen to mimic OEMs when dealing with foreigners. They may tell you that they are the original manufacturers and it’s quite likely they will be very convincing about it as well. However, unless you are able to verify their business licenses and registrations as supportive of their claims, there is no reason to trust them.

As a matter of fact, even that alone is not enough to earn complete trust. It’s quite possible that they really are manufacturers, especially if it’s China, where most of the world’s products are manufactured and assembled. However, that is no guarantee that they are any good at what they do. Trust needs to be earned when it involves protecting your investments, which leads us to the next point.

Trust Needs to be Earned: How?

It’s a simple, yet golden rule of business, and when your products or their parts are being manufactured thousands of miles outside your own country, the rule applies even more.

You have a right to protect your investments to the best of your efforts and, therefore, you need more than just the verification of the fact that your potential manufacturing partner is indeed a manufacturer!

There are two primary and quite effective ways to ensure that a foreign manufacturing business is actually worth partnering up with. We will discuss them next.

Go with a Brand that has Already Established that Trust

There is no better alternative than this one, and it is highly advised that all new businesses looking to manufacture outside the country take this route. If a manufacturer has already earned the trust they need to with bigger names than that of your own organization, then you can certainly rely on them, which makes everything go so much faster and smoother, not to mention the peace of mind which it brings.

In China, RapidDirect is the biggest name that there is in the local manufacturing network. They have even manufactured parts for NASA. So, that’s an example of a foreign business that has already earned the trust, and when you partner up with big brands like that, it doesn’t matter where they are located; you will always get what you need.

Test Them Out with Small Orders First

This one is a time-tested and well-proven strategy for any new business contract; test their efficiency, accuracy, delivery time, and all the other criteria which are important for the business with smaller orders. If the first batch works well, make the next order a bigger one and see how well that pans out. After a few transactions, it should be fairly easy to determine whether they are actually worth your investment in time and money.

There is an undeniable chance that you might not get the foreign manufacturing partner you were hoping for on your first trial order, but it’s still better than placing a large one and suffering huge losses because of that. Avoiding both is possible though, if you go with a bigger brand which has already established trust in the industry, as mentioned in the previous point.

Do Not Restrict Communication with Just One or Two Personnel

As you will most likely be working with a salesman representing the manufacturing company, it is possible that the sales agent may not always be available to cater to your needs. This is why you should make it a point that you need to work with at least two or three representatives of the manufacturing unit. Aside from ensuring smooth and better communication, when you interact with multiple employees, you will be able to build a better rapport with your foreign manufacturing partner.

All Important Communications Should be in Written Form

There is one more, very important step which we need to discuss that involves communication. This can be difficult because of the language barrier, but since English is a universal language in business now, for the most part, it won’t be as big a problem as it once was.

Unfortunately, the accents we have in each country are not the same, which can lead to serious miscommunications. Communicate with your foreign supply partner via written instruction sets, complete with all details necessary to ensure there are no mistakes or guesswork involved in interpreting the design of the actual product. The old “tomayto, tomahto” debate is not as trivial here as it may be in general!

That’s about it really. Once you have checked off these, rest assured that you have indeed found a profitable partnership in another country. Things may change in the future, but for now, this is pretty much all a small business owner needs to worry about.