Business returning from China benefits local manufacturers
Specialist high tech manufacturers are benefiting from a steady stream of local businesses bringing their outsourced work back from Asia, to New Zealand. Wiring loom manufacturer Fero is one of several businesses that are gaining custom from local companies that have found it harder than originally anticipated to get their componentry manufactured in China. Sam Fulton, Sales and Marketing Director for high tech wiring loom manufacturer Fero, says many returnees had not taken into account the true cost of doing business in China: “It is easy to be beguiled by what on the surface appears to be a low price, but buying at the cheapest price always comes at a cost”. “You get what you pay for in China so if the price too good to be true, then it is. Many Chinese manufacturers reduce costs by compromising the quality of the raw materials in their product. For example, copper wire costs are reduced by using recycled copper, which does not perform to specified standards. This can result in quality problems and high mitigation costs once the component is in use. “It’s a very different way of doing business to New Zealand, so it is easy for local manufacturers to get stung. That is why it is important to shift one’s thinking from unit-based to taking into account the overall cost of doing business,” says Mr Fulton. Although its manufacturing is still cheap by New Zealand standards, rising labour and other costs are seeing China become more expensive to do business with. Its manufacturers are off-setting these costs through economies of scale. As a result, minimum run sizes are increasing beyond the reach of many New Zealand manufacturers. “Even large manufacturers by New Zealand standards can be shocked to find that an order they consider huge by local standards is […]