Manufacturing was the force that transformed many areas of Asia in recent decades, and manufacturing in Asia has continued to drive the region and the world. There are compelling reasons why Asia will remain a major manufacturing hub for the foreseeable future, but those sourcing from Asia need to be aware of the potential pitfalls as well as the opportunities it offers.
It is important to keep in mind that Asia covers a lot of nations and cultures that sometimes have very little in common. From Japan with its very advanced economy to nations like Laos that are just starting to become more integrated into the world economy, the region is as diverse as the rest of the world.
With this diversity, there are opportunities for every type of manufacturing. Countries like Japan and Singapore have given up their labor intensive industries to cheaper competitors with others to include Taiwan and South Korea are not so far behind. Even China is losing some of its competitiveness in low-wage, labor-intensive industries, as Vietnam and others take more of this business. Be it lower or higher end manufacturing, one thing these nations have in common is that manufacturing has remained an important part of their economies.
Reasons for manufacturing in Asia
Although labor costs in Asia are gradually increasing in most areas, the costs in many countries are still considerably lower than in the West. Furthermore, this large labor pool is often much more educated and disciplined than in other areas. This access to skilled yet relatively lower-cost labor makes Asia very attractive for manufacturers.
Since Asia has been a major manufacturing hub for a while, it has had time to gain a lot of experience, and there are many top notch manufacturers to choose from. Networks of suppliers and expertise now exist in Asian manufacturing centers, sometimes offering new and flexible techniques that often cannot be found anywhere else.
Apart from investing in education, many Asian nations have also made significant investments and improvements in their infrastructure. This has served to prevent bottlenecks, lower costs and improve delivery times.
Disadvantages of manufacturing in Asia
Manufacturing sourcing necessitates the sharing of information. This is never something companies want to do, and it is made more troublesome when that information is being shared with an entity which is so far away. Therefore, any company manufacturing in Asia needs to carefully consider what intellectual property it will share while making sure it has the appropriate NDAs and patents in place.
Having manufactures on the other side of the world adds to administrative burdens too. Different time zones mean different business hours as well as different national holidays. This need to coordinate things so far apart can be an administrative burden. At times leads to more serious issues such as when a problem becomes worse simply because it was not addressed in a timely manner.
The fact that the languages, cultures and systems are different too is no academic matter. What is acceptable in one culture may be a great insult in another. In addition, different systems and ways of doing business can cause friction. While factories that manufacture goods for outside markets do have experience in this field, problems still arise, particularly with language and quality issues. The factory representatives may hide the fact they do not understand or miss the point without even realizing it and different ideas about quality take a long time to overcome.
Making manufacturing in Asia work better
There are many ways to minimize the drawbacks of manufacturing in Asia. This should start with finding an agent or other third party that can be trusted. This can eliminate the need for a lot of business trips, employing multilingual staff and nip small problems in the bud before they turn into bigger ones. It can also help in cutting through bureaucracy and other problems. Steps need to be taken to ensure this third party is not connected to the manufacturer in any way and has no conflict of interests.
Sampling and costs quotes need to be taken very seriously. Repeatedly check to make sure the factory understands just what is required and quotes accurately. Samples need to be confirmed that represent exactly what the buyer requires before going into production, and samples of the first products produced should also be carefully checked.
Quality control needs to be thorough at every turn. The manufacturer may say they understand exactly what is required when, in fact, they do not. This means quality control steps must be taken throughout the manufacturing process. In addition, goods should never leave the factory until they have been inspected. However, the manufacturer must understand that none of these inspection processes release them from their responsibility and liability for anything that is not manufactured to standards.
Before placing any other, it is necessary to be sure of all details about the order to include production times, ports, shipping and customs. Do not take anything for granted.
Finally, while conditions and wages are rising for workers, manufacturing in Asia still involves the unethical exploitation of workers at times. Check with suppliers to ensure suppliers are following proper labor practices.