Should Your Business Outsource to China or Expand There: Our Tips on How to Make the Decision

When you first launch a business, there is no doubt you’ve laid out a full business plan, complete with all the goals and milestones you hope to achieve along the way. Within that plan, there’s a good chance you have alluded to the possibility of growing and expanding as the need arises. And while that may seem far off in the future, that point can come quicker than you may have anticipated.

So, what happens if your business has reached the point of expansion and you’ve got your eyes set specifically on China? That could entail opening up new locations or securing warehouse or factory space, or maybe it’s just the fact you need to produce more goods and products and are now considering outsourcing to China in order to meet the company’s needs. When is a good time to make these moves?

The decision to outsource to China or expand in the local market isn’t one you want to race through or take lightly. Instead, there are a number of factors well worth considering. Here are a few of the key questions and considerations you’ll want to be aware of.

Why Outsource Your Operations to China?

Outsourcing isn’t a new practice by far, but it is certainly something that is being embraced at new levels. Outsourcing to China simply means that you move part of your production or operations to China while your main offices remain here in the United States. For businesses that are looking to expand their current product line-up, hire on more staff, and just expand in general, it can be a great option.

Some of the biggest pros to outsourcing to China include the fact that you can take advantage of high-tech tools, software, machines, and processes that you don’t have to invest in yourself; it tends to be more cost-effective to outsource to China than expand operations here in the United States; and it gives you that “in” in the Chinese marketplace.

Other common reasons why companies are making the move and outsourcing to China include the following:

  • Affordable products/materials
  • Labor costs are cheaper
  • Access to a huge source of materials
  • The flexibility to get exactly what you need
  • Ability to take advantage of the talent available in China
  • The ability to free up your focus at the home office

Just as there are many benefits, there can also be some cons in outsourcing to China, with the biggest one being quality control. You aren’t there on-site each and every day, which means you are putting quality control in someone else’s hands. Strict measures will need to be put in place to ensure all products are up to par and meet your expectations/specifications.

There can also be an issue with the quality of the materials themselves, as they may not be as high as what you would find in your own country.

Why Expand Your Business into China?

Maybe outsourcing isn’t the solution – maybe you prefer to set up a physical location in China. That could mean office space, retail space, or even a factory where production is taking place. Of course, the biggest pro in opening up a location in China is that it allows you to tap into this potentially massive market.

Considering China has a population of around 1.4 billion, it truly would fit the desire to expand. And it’s not just China you would be expanding into; you can think of it as a gateway to the entire Asia-Pacific market.

Over the past decade or so, the Chinese government has been making a huge push to uplift innovation and consumption, really opening up the market in ways the world has never before seen. There’s also a very defined middle class that has emerged in the country, which is driving the consumption.

Now, keep in mind that staffing a new location in China can pose problems if you’re not familiar with the local laws and regulations, customs, culture, and language. This is even more so the case if you don’t plan on relocating yourself so you won’t be on-site to oversee the operations. A viable solution can be to use New Horizons Global Partners, which has China company registration.

China stipulates that in many cases, the registration and formation of a local company are required when you employ people in China. This can obviously pose an issue as you look to expand into the market. New Horizons Global Partners will work with you and guide your company through the process.

As for the recruitment process, this is when Sky Executive can step in and make the process much smoother for you. Sky Executive will make sure that all the top talent is recruited and hired for your team, and that an extensive headhunting process takes place. They will search a pool of talent, not just in China, but around the world.

Take Your Time Going Through the Options

Clearly, making the choice to outsource or expand to China is a multi-layered decision that should be taken very seriously. Be sure to explore all your options, as well as all the information out there, and make an informed decision.