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Too Good To Be True?

There are some topics that run and run and the debate over buying from a cheaper manufacturing region such as China or Eastern Europe can look attractive on the face of it. However, what looks enticing at first glance, may not actually be the financial salvation hoped for and there are a number of factors you need to take into consideration to avoid any unforeseen pitfalls.

Firstly, there is the communication issue and the potential for misinterpreting requirements. especially technical ones. Then you have the constraints of the time difference, particularly China which is 8 hours ahead. Add to that national holidays, the inconvenience of not having a local sales rep and the difficulty in providing artwork/drawings with matching colours and finishes etc and you're only scratching the surface with some of the challenges!

Accurately calculating the currency conversions, arranging pro-forma credit terms and a deferment account for import costs are just some of the challenges not always taken into account when first striking a deal. The more onerous task regarding ownership of tooling and the associated challenges of getting it shipped to and from the manufacturer also need to be considered.

Shipping methods and charges can be confusing i.e. do you use an international carrier (i.e. FedEx/DHL) or a recognised freight handler/importer? Are the prices quoted CIF or FOB this is really important as it can make a big difference if the goods are heavy. Another area to be aware of are hidden import charges which can be between 7 - 12%, factor that in with lengthy lead time and all of a sudden the picture has changed.

The emphasis on saving costs, especially in this economic climate, remains paramount and the drive to increase the bottom line has seen a number of manufacturing plants being moved abroad; but is the overall savings you are making worthwhile after considering some of the above points? Interestingly, some of the subsidies that were in place are now being reduced; equally the pressure on the pound will all have an affect on future overseas trading.

Diametric has considerable experience and understands the constraints faced when dealing with overseas manufacturing. As a result we are able to manage the process from design to manufacture including the aftercare service, ensuring both costs and time-scales are guaranteed. If you are interested in exploring this avenue or require further information please speak to either Pete or Graham in the sales team 0844 4123245.

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