none

WHEN IT COMES TO MANUFACTURING, CHINA STILL HOLDS THE ACES

11-12-2014
by 
in 

The rising cost of wages in China has prompted many Australian companies to look for cheaper options when it comes to manufacturing.

There’s now a strong trend to move manufacturing operations to countries like Bangladesh, Vietnam, Indonesia and Cambodia, which offer even lower labour costs.

But Brett Birkill, a successful Australian supplier of workwear, warns companies to “think twice” before moving their operations out of China.

“The rising costs of wages in China might make such a move seem enticing, but this may be a false economy,” he says.

His company, Prime Mover Workwear has been manufacturing work wear and hi-vis gear in China for ten years. And they're not planning to move operations any time soon.

“These other cheaper countries don't have the infrastructure that exists in China, he says. “The infrastructure (in China) has taken decades to establish.”

Mr Birkill says workers across all of Asia are starting to demand better wages and working conditions.

“So the cost of producing in Bangladesh, Vietnam, Indonesia and Cambodia is likely to increase soon too, he says. “Savings may be short lived.”

Mr Birkill says a good existing supplier relationship in China is of great value – even if the cost of product increases.

“They know your product and they understand the quality control, he says. “And they know how to work with your timing constraints.”

Other benefits include:

·       Good management systems

·       Good lines of communication

·       Better conditions for workers (crackdown on under age labour)

Also, the Chinese are likely to produce with fewer errors as they have more experience, he says. 

Mr Birkill admits China once had a poor reputation when it comes to quality.

“Anything Made in China was expected to fall apart – it didn’t matter what it was.

“But it taken China 10 to 20 years to better understand their markets, and Australia is one of those markets.

“The quality has improved significantly … we seldom have any issues in China and the return rate is miniscule.”

China also offers political stability, says Mr Birkill.

“Consider the political situation in other countries. Is it stable? Is it corrupt?” he asks.

Mr Birkill says before taking your business to other emerging Asian countries, Australian companies should first consider moving to smaller, regional areas of China like Suzhou, just two hours west of Shanghai.

“The wages aren't as high as in Shanghai.”

Prime Mover Workwear has its headquarters in Melbourne and distribution centres in Perth, Auckland, Hong Kong and Suzhou, China (which currently employs 200 local workers). 

All of these factors lead Brett Birkill to the conclusion that a move to a cheaper country is a false economy.

“Sure you might save 5 percent in manufacturing costs, but when you consider poor quality, difficult communication and management and lost sales, is it really cheaper?”

Prime Mover Workwear boasts more than 250 products and supplies to mining and manufacturing sectors globally.

Would he consider manufacturing his products in Australia?

 

“It’s just too expensive,” he says.

Related news & editorials

  1. 07.12.2018
    07.12.2018
    by      In
    Control Logic has a range of LED-based tubular light fittings that promise considerable energy savings in hazardous environments. The R. Stahl 6036 series are suitable for use in Ex zones 1/21 and 2/22 where they provide a low-energy alternative to typical linear luminaires.
    At just 55mm diameter,... Read More
  2. 07.12.2018
    07.12.2018
    by      In
    Alfa Laval claims that its Aseptic Mixproof Valve can deliver a total cost saving of up to 45% for manufacturers using aseptic processing. The claims are based on a comparison of capital expenses and maintenance costs of an aseptic 2.5in valve over a five-year period if service is done onsite. If... Read More
  3. 07.12.2018
    07.12.2018
    by      In
    Available now from Adam Equipment, Cruiser benchtop checkweighing scales feature seven built-in applications that make them ideal for production, warehouse or field use in a range of industries.
    The Cruiser range includes models with standard, high-resolution, and ultra-high-resolution... Read More
  4. 07.12.2018
    07.12.2018
    by      In
    The STExCP8 range of manual call points are SIL2 compliant to IEC 61508, allowing system integrators greater confidence when designing systems requiring an enhanced safety integrity level.
    Made by E2S Warning Signals and available in Australia from Mechtric, these robust devices are part of the... Read More