Changing China

For New Zealand businesses over the last few decades manufacturing in China has been a temptation to good to resist. The savings on costs, and remaining competitive in the international market have been well publicized, and largely accepted by consumers. The Made From New Zealand initiative is an interesting sign of the times with regards to the realities of New Zealand business.

Orca has been working with factories in China for nearly 20 years - primarily because that was where the expertise was for producing the products we make. But China doesn't represent the holy grail for New Zealand businesses, looking for cheap manufacturing anymore.

I've seen a huge shift in how factories operate, which has led to increases in costs. One of the big changes, which is definitely a positive, is the working conditions for employees. Our factories all provide a code of conduct for how they treat their employees, and skilled workers are in demand as factories seek to provide consistent quality to their customers.

While they are by no means there yet, there are also increased costs associated with meeting environmental expectations, raw materials and energy costs are increasing, and many countries continue to impose duties and tariffs on Chinese made goods.

The result of this? We're now seeing manufacturer's from other parts of Asia competing for, and often winning the business that would've gone to China five or 10 years ago.

After talking with New Zealand Trade and Enterprise, Orca set up an office in Hong Kong in 2004. It was an important step for us to be able to better manage the product development and production cycle, and be close to our factories.

While cost is always a consideration, we also look for expertise, experience, quality and reliability. Our team is now working with factories in China, Taiwan, Thailand, Vietnam and other Asian countries.

Those of you who have worked with factories in Asia know you can't take anything for granted, but nowadays you should consider casting your net wider than China when looking for manufacturing options.

 

Scott Unsworth