A number of recent studies have shown that Chinese manufacture may no longer be the inexpensive solution it has become renowned for, on account of rising salaries and the burden of ‘add on’ costs which still catch out many UK businesses.
“Sourcing goods in China purely because of ultra-low costs is a thing of the past,” said Nick Debnam, KPMG’s Asia Pacific chair, Consumer Markets.
Higher wages, an ageing population and labour shortages in some regions of China are important factors when securing product manufacture, meaning that the UK is becoming an ever-more desirable alternative.
There are other concerns when sourcing from the Far East beyond just the core cost. ‘Add on’ costs often account for 50% of the total bill, and most businesses simply don’t see them coming. Issues with quality control, the need for personal visits, transport costs, taxes, technical support, insurance and more all add up to sizeable expenses, according to Dr Ken Platts, Head of Centre for Strategy and Performance at the Institute for Manufacture (IfM).
“These studies simply back up what we’ve been noticing for some time,” added Tim Wegener, MD of UK injection moulding specialist Knight Precision Moulding. “A large number of customers are turning their backs on Chinese manufacture in spite of the initially-appealing cost situation. They’re struggling with the added costs, the potential quality issues and the challenges of managing a project as such physical distance.”