WHY SMEs ARE SOURCING FROM CHINA

China is the perfect starter-country for companies testing the waters of low-cost country sourcing. Big business paved the way more than 40 years ago and now, because of that, China has a very mature and stable supply chain making it a relatively low risk choice for companies new to LCCS. There are a number of factors that make China a good sourcing fit for the risk averse SMEs, but for the purposes of this blog I'd like to highlight what I consider to be the most important.

· Skilled labour - The Chinese labour force is highly skilled. China can produce extremely complex products from toys to electronics to automotives and machinery. For complex technical and industrial products, there is simply no equivalent low-cost competition. Beyond the high complexity level of China's output, one of the reasons that keep SMEs coming back is the speed at which goods can be produced. For many products, China can produce them better and faster than any other low-cost country.

· Raw materials and sub-suppliers - China has a large sub-supplier market meaning, many low-cost countries actually source their materials from China. If a UK-based hardware company decided to outsource its manufacturing to India, more than likely that Indian factory would be sourcing parts, screws for example, from China. China also produces cotton and many other raw materials required for manufacturing. Being able to source everything locally reduces both cost and delivery times and it reduces the number of countries, and therefore the level of complexity, of low-cost country sourcing.

· Mature supply chain - China has the trained labour, the sub-suppliers and, after years of experience working with international companies, it has the necessary understanding of the export market. China has the infrastructure and the logistics in place to efficiently support the global manufacturing market. China has the years of experience to be able to ensure quality throughout the entire supply chain from sub-suppliers, materials, transport, manufacturing and so on. That, more than anything, is why China has become the benchmark for low-cost country sourcing.