Consumers took the “Made in China” label for granted: few questioned the quality and were often just attracted to the low price. The average consumer now scrutinizes what “Made in China” really means and asks: Is it really that cheap? What’s the quality like? And most importantly; Are the Chinese goods, despite their price, worth it?
Products of Poor Quality
Consumers always wonder why everything in American stores seems to be made in China, and that’s because it’s cheaper. Profit is why companies exist, so finding the best deal was the best way to cut margins. Usually, that meant China.
As soon as the North American Free Trade Agreement was passed in 1992, manufacturing in the United States changed. With Nearshoring, companies can now make their goods closer to home (in Canada or Mexico) and enjoy the same cost savings without having to worry about shipping them overseas.
According to manufacturing agent Michael Diliberto, Chinese manufacturers had to cut corners to compete with Mexico and North America.
First, and foremost, Chinese domestic manufacturers generally go for either the best product or the cheapest product. So, if you are not making the best, you are racing to the bottom to make the cheapest. Consumers looking at products from China are not generally looking at quality; it is assumed that if you want quality, then you buy the best one; otherwise just buy the cheap one. Manufacturers, especially in China, are not rewarded for making incrementally better products.
Paying Extra for Any Kind of Quality
By cutting corners when manufacturing to produce the cheapest products, you can save money in the short run, but it has a downside: if quality is important to the company (as it is for most), the company will have to pay more for it, and the increasing costs will inevitably lead to:
- Take a bite out of your profits
- Consumers will pay for it, as cost will be passed on to them.
But with virtually everything made in China now, competition is no longer about quality–it’s only about price. Where’s the competition in quality when everything is made in China? There isn’t any; the quality is low regardless of the brand on the device, tool or appliance. The conclusion pretty much boils down to the simple rule: you get what you pay for. In the case of “Made in China” it also means that that it is no longer the most cost-effective option.
Tariffs & Duties
We shouldn’t forget tariffs: No matter how good the Chinese goods are, you’ll pay a tariff on them: right now, the tariff for goods from China can go as high as 25%, depending on the type of item. Because of USMCA, there are no tariffs importing goods from Mexico & Canada.
Here’s Why Mexico’s Better
NovaLink understands that manufacturers don’t want to cut costs, so we offer the solution of manufacturing in Mexico instead of China. Here are some benefits:
- Shipping: As long as you have a good road and rail network, you can ship goods from Mexico to North America in less than a day.
- Wage Stability: Mexico’s wages are some of the most stable in the world; this makes investing in nearshore manufacturing very attractive to companies. In similar fashion, China’s factory wages have grown dramatically over the past 8 years, with some regions seeing increases of up to 20% per year.
- Advantages of the USMCA: When tariffs are lowered or eliminated, it decreases production costs and trade costs, which means lower prices for consumers and better profits for companies.
China Manufacturing Deception: Don’t fall for it unless you don’t care about quality, cost-effective labor, proximity and trade policy. Find out how to move your manufacturing out of China with a free consultation from NovaLink today.