Move Manufacturing Out of China​

Move Manufacturing Out of China with NovaLink

Your business will benefit from simpler supply chains, not having to worry about intellectual property theft, and an easier, more affordable labor pool if you Move Manufacturing Out of China with NovaLink.   Since July of 2019, the United States has imposed a 25 percent border tax on goods made from factories in China when they’re imported into the US. The goal of this tax, and the other China tariffs, is to make Chinese products more expensive for American consumers and businesses to buy. If your company is currently manufacturing goods in China, your goods will be subject to a 25 percent border tax, which will mean you will either have to raise the price of your goods and pass the expense to your customers or accept a cut into your profit margins.

However, there is viable solution for companies who may be considering to Move Manufacturing Out of China: Move your company’s manufacturing to Mexico. With the new trade agreements between Mexico, Canada and the United States now in place, full package manufacturing between these nations is now easier and more cost effective than ever:

Making the decision to Move Manufacturing Out of China doesn’t have to be a complex headache that costs your business money; taking advantage of the Mexico manufacturing advantage with NovaLink, is an easy, seamless process. Contact us today for an evaluation.

Why Are Companies Moving Manufacturing out of China?
Manufacturing is a major industry in China, as we know. However, a third of supply chain leaders plan to move some of their manufacturing out of China by 2023, according to Gartner research. Here’s why so many companies are moving out.
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China vs. Mexico: A Breakdown for U.S. Businesses

Read 9 compelling facts about Manufacturing in Mexico vs. China from JP Morgan Chase.

Find out More
With businesses ready to move manufacturing out of China, manufacturers are looking for the next location of their manufacturing operations.  The most popular of these alternate destinations is Vietnam, which manufacturers are seeing as a sound alternative to China.  However, those looking at Manufacturing in Vietnam should be careful; Vietnam has many of the same problems as China when it comes to manufacturing (with the exception of trade tariffs). 
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Why U.S. Companies Are Moving Their Supply Chains From China to Mexico

NovaLink believes manufacturing in Mexico with Mexico Supply Chain Services should be easy, fast, and cost-effective. Supply Chain Brain has a list of reasons why companies are moving their supply chains from China to Mexico.

Ground Transport

Goods can be imported from Mexico via ground transport in a matter of days or even hours. This is never an option for goods manufactured in China, from which everything must come by ocean or air. The former is very time consuming (it can often take weeks), and the latter is very expensive.

“Trusted Partner” Status for Customs

The U.S. offers two programs that help facilitate faster and easier Customs processing for U.S.-Mexico trade: FAST and C-TPAT. Initiated after 9/11, FAST is a trusted traveler/trusted shipper program that allows expedited processing for commercial carriers who have completed background checks and fulfill certain eligibility requirements (much like TSA Precheck for air travelers). FAST certification is for drivers; C-TPAT is a broader program that shippers must apply for. Once a company is certified for C-TPAT, its drivers can then apply for FAST. There are no such programs for U.S.-China trade.

A Transparent Landscape

There are also new modern options for transport that make Mexico attractive. Companies can coordinate door-to-door transportation between the U.S. and Mexico, including procurement of trucks on both sides of the border, customs clearance, insurance, financing, and reporting. This allows manufacturers to focus on their core competency, rather than logistics, and can also reduce the need for big in-house shipping and logistics teams.

Smaller Language Barrier

Spanish is the second-most common language spoken in the U.S., making it relatively easy to communicate with partners in Mexico (and find bilingual staff and vendors).

Time-zone Parity

Mexico operates on the same time zones found in the U.S. — Eastern, Central, Mountain and Pacific.

Do You Have a Minimum Order Quantity (MOQ)?
It is common practice in manufacturing to set a minimum order quantity (MOQ), which is the fewest amount of units that need to be purchased at once. Manufacturers or suppliers usually use MOQs for production runs, but a manufacturer can set them for different types of orders. At NovaLink, we do not establish relationships with our manufacturing partners based on MOQs, but rather through sustained production. NovaLink believes that having a consistent volume that engages full-time manufacturing teams year-round is the key to a successful, financially-viable manufacturing project. Partnering with NovaLink is not for “short runs” or products that require simple, machine-based production.

 

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Made in China Myths

Select any of the facts below to learn the truth about manufacturing in China.

The cost of facilities in China has gotten so high that a Chinese company opened an industrial park in Mexico instead of China.

According to Boston Consulting Group, workers in Mexico’s manufacturing sector made 60% more than their Chinese counterparts in 2000.  Now they earn 11% less.

Mexico has continued to stay more productive than China per worker,” Justin Rose, a partner at Boston Consulting Group in Chicago, told Quartz. “Sometime in 2011 or 2012, from a labor-cost perspective, it became cheaper to put manufacturing capacity in Mexico than in China.”

Tariffs Eating Your Profits? Move Manufacturing Out of China​

The decision to Move Manufacturing out of China and into Mexico is an easy one when facing tariffs. Imported goods from factories in China are subject to a 25 percent border tax since July of 2019. These taxes, along with other Chinese tariffs, are designed to increase the price of Chinese products for American consumers and businesses. Your goods will be subject to a 25 percent border tax if you manufacture in China, so either you have to raise the price of your goods and pass the costs on to customers or take a hit on your profit margin.

The good news is that there’s a solution to the China tariff crisis: Move your company’s manufacturing to Mexico. Since the new trade agreements are in place, it’s now easier and cheaper to manufacture goods and services between these nations:

  • There are no tariffs for products made in Mexico and imported into the United States that meet NAFTA rules of origin requirements.
  • Lower shipping time for goods to get into the United States
  • Lower average cost of shipping
  • Lower number of days to start Mexico shelter services manufacturing
  • Cost-effective ad more productive labor pool

Explore Other Resources

Please explore these other useful resources to better understand NovaLink contract manufacturing: