Although Chinese salaries have increased considerably in the last few years, they are still able to compete in terms of price; strange, isn’t it? In order to explain why, the following points should be considered:
- Scale economy – Chinese factories have been mass producing products for decades at full capacity, thus allowing for an optimum price point.
- Incentives and skills – Factory workers are typically rewarded according to the amount they produce. Generally, factories pay their employees a small base salary and additional wages based on their daily production.
- Automated production – most medium and large factories are using fully automatic machinery.
- Hours of work – Chinese workers work faster and take fewer breaks during working hours, ensuring that their productivity and efficiency remain high. This is due to the fact that they receive incentives based on their productivity.
- Cost-effective Capital Assets and Funding – China has simple laws that make it much easier for entrepreneurs to succeed in China as compared to another country where there are so many regulations and government interventions that make it difficult and time consuming to start a factory, resulting in a lower capital requirement.
- NO R&D – Most of the products are either copies or inspired by western brands, so research and development costs are negligible.
- The logistics process – While salaries are not the major costing factor in production, logistics are very important. SEZs are located throughout China in every area that specializes in a particular product. It is easier and more cost-effective to locate raw materials or semi-finished goods in cities that manufacture only certain products.
As a result, China offers a wide range of affordable products for sale throughout the world. We will assist you in finding a suitable supplier for the product you are interested in purchasing.
