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China

China is now a major industrial powerhouse in the electronics manufacturing industry as a result of its competitive labour rates, highly skilled labour and a general ability to implement project plans quickly.

It is widely believed in the west that lower complexity, higher volume products are the only type of electronics goods that can be successfully manufactured in China because of the economies of scale. However this is not always the case. If you are prepared to look hard enough, suppliers can be found for most volume sets and most complexities of product.

Typical commodities which can be sourced very successfully from China include:-

Hong Kong performs a vital role as a hub for goods moving in and out of China mainly for VAT and duty reasons. Any movement of goods into mainland China will incur a duty payment. In addition, Hong Kong is geographically close to two major industrial areas in Shenzhen and Dongguan which reduces transportation costs over this vast country.

In the 1980s, the Peoples Republic of China (PRC) established special economic zones in places like Guangdong Province. Additionally, a portion of Shenzhen was designated as the Shenzhen Special Economy Zone (SSEZ). In 1984, the PRC opened a further 14 coastal cities to overseas investment.

Primarily geared to exporting processed goods, the special economic zones are foreign-oriented areas which integrate science and industry with trade, and benefit from preferential policies and special managerial systems. Moving goods into or out of a Free Trade Zone (FTZ) does not incur any form of duty payment. Import and export paperwork is virtually eliminated and logistics are a lot easier.

Chinese culture is rich and steeped in history. The Chinese people are very hospitable and this plays a very important role in the business relationship. Be prepared to socialise. To be successful, you must invest time in the relationship. Personal contact is vital for the business relationship to succeed and several visits and face to face meetings will be required to cement the mutual understanding of each party's requirements.

Remove ambiguity from any drawings, specifications or parts lists. Make it clear at the outset exactly what is acceptable and what is not with regards to quality, aesthetics and cosmetics and you will save yourself a lot of time later.

If it is possible, put a process engineer or quality engineer on site during the first production run in order to set the standards right from first part produced.

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Guide Written by Paul Wilson

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