Many companies found electronic contract manufacturing in China does not imply to low cost manufacturing anymore. Especially in recent years direct labor cost in China is dramatically raising due to the shortage of labor in China, especially at those electronic industrial zones, caused by continuous growth of electronic contract manufacturing industry in past twenty years. The minimum wage of labor by law in China also has taken a significant effect on raising the costs of running a factory in China for original equipment manufacturing as core business. Though the overall price is still distantly lower than doing the job in north America or western European countries.
But does that mean because the price is rising, it become less attractive to do electronic contract manufacturing in China? If you know this industry well, you sure notice the answer is “No”.
When you do off shore manufacturing, it’s not only the product that you are paying for. Instead you are mainly paying for the “services”. Services in contract electronic manufacturing means quality, flexibility, turn around time, supports, fair and honesty. Choosing an electronic contract manufacturing supplier nowadays is more important to look into their services that being provided than just price itself.
Electronic manufacturing services companies in China are not compete in price anymore but services. Good electronic contract manufacturers will have confidence to raise their price to a “reasonable” level because they know eventually; their professional services will save you costs. They know it’s not just the unit price that you are focusing on, but the whole package of services which will bring you cost saving in the supply chain hence money to the company. Those electronic contract manufacturers will more focus on studying how to improve quality, how to work more efficient with the customer as well as their own suppliers, never stop asking questions and making suggestions for improvements. Some electronic manufacturing service providers even set up an engineering team specialize on studying improvements of the product design, even though the products were designed by customers. This electronic engineering design force focuses on studying the customers’ product designs to make it more design for manufacturability (DFM). This kind of value added services are what the China electronic contract manufacturers competing.
Electronic manufacturing service industry in China is not in price war anymore, it’s now in war of service. Though their unit prices in dollar raised, but as long as their service and quality level raise more, means their price is in fact lowered. China manufacturing industry has stepped into next level while other countries’ manufacturers are still bidding at the lowest unit price.