There are many ways of doing business. In the manufacturing sector, they are larger than the product’s final distribution. There is a lot of equipment, raw materials and space needed to produce the product. For example, the pharmaceutical and specialty industries have many processes before the finished product is manufactured on the market.
It is not possible for manufacturing companies to have all the equipment, skills and resources they need, and therefore decide to give part of the processing to smaller units or third world countries. They conclude a contract where the production of specific batches is outsourced to GMP (Good Manufacturing Practice) certified by third parties. Raw materials or ingredients usually get a product-driven company to control quality. This agreement in which a company that has specialized equipment or processes raw or semi-finished products for another company is called the product manufacturing.
Product manufacturing has another advantage, transferring work to another smaller unit saves a lot of money. Investing in a third world country gets better than being produced in your country. There are many companies in Asia that provide product manufacturing.
Some manufacturing companies provide a full range of custom manufacturing services. Product manufacturing can be a mixture of different techniques. Product manufacturing in China helps utilize high-level skills that are available at a lower cost. It also works well for high values and complex products. Contract manufacturing not only apply for high quality products, but also for products such as clothing and sports goods. It helps to reduce the cost of the product and customers get the final product at a reasonable price.
Larger corporations have consistently found success in opening a manufacturing plant in China. They are satisfied and have the necessary resources. Although this route is very attractive, especially for larger organizations, it represents the highest risk and requires the company to gather its own team of experts in production areas.