Three Business Guidelines before Outsourcing to China

China is seen by most companies as a potential alternative to India in terms of offshore outsourcing.  China s extremely huge labor force and relaxation of state regulations made it a solid competitor in the outsourcing industry.  In fact, some companies have started outsourcing to China their manufacturing and other business processes. The IT and mobile communication industries are the leading sectors in tapping the domestic talent and work force of China.

When outsourcing to China, companies are generally advised to follow certain business considerations and contingencies.  These informal business rules came out as the crystallization of experiences gained by pioneering companies that outsourced some of its business processes and manufacturing to Chinese corporations.

First, when outsourcing to China, companies are generally advised to maintain a certain level of diversity and flexibility in sourcing.  This means that companies should find a couple of companies to deal business with.  This is due to the fact that some Chinese companies often go bankrupt.  The disruption of operation will definitely impact on companies manufacturing and production time table.  It is better therefore to consider this before outsourcing to China.

Second, it is generally acknowledge that outsourcing to private Chinese enterprises would be better compared to state-owned and state-subsidized corporation.  Although private enterprises in China are smaller they have greater stability and are more flexible in dealing with Western outsourcers.

Finally, companies can use outsourcing as a necessary first step to barge into the huge domestic market of China.  Good relations with local businesses could provide companies with a solid partner for distribution and marketing of consumer products.  Making it big in the Chinese market will definitely boost corporate sales and production.

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