Import: Is Offshore Manufacturing Right for Your Company?
Do Your Homework First to Find the Best Offshore Partners
If you’re looking at offshore manufacturing as a means to reduce your costs, make sure you spend the time upfront to thoroughly research, and carefully evaluate, your decision. You want to make sure that it’s the right decision for your company, and that you find the right partners.
Carefully Evaluate the Costs
The general assumption is that it’s cheaper to manufacture offshore than in Canada; however, you might find that isn’t necessarily true when you calculate the direct and indirect costs involved.
Direct costs include:
- Shipping
- Customs brokerage fees
- Import duties
Indirect costs include:
- Training
- Travel
- Communications
- Management time
- Potential loss of intellectual property
Your indirect costs will vary depending on such factors as:
- The complexity of your product(s)
- The qualifications and ability of your manufacturer(s) and their workers
- The reliability of your shipper(s)
- How often you will be required to be in contact with the manufacturer, whether it's in person or by email, teleconference or videoconference
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Seminar Package: Growing Your Business Through International Trade
Looking to expand your business beyond our borders? This package includes two seminars to help you explore the flow of goods, information, and finances.
- Cash Flow and Your Growing Business
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See All ProductsSmall Business BC offers a multitude of services to assist you with growing and managing your business.
- You can register for our importing seminars to learn what is required to bring your products into Canada.
- You can book an appointment with one of our trade advisors to discuss your business goals, and to help you develop or update your plan to source offshore manufacturing or import your inputs into Canada.
Enter Offshore Manufacturing With Your Eyes Open
Be aware of everything that is involved. Will your intellectual property be respected and protected by your offshore manufacturer? Are the manufacturer and its personnel qualified to make your products? Are your offshore partners reliable? Are there any import restrictions or quotas?
Evaluate all of your costs. Cost reduction is one of the most common reasons why businesses use offshore manufacturing. Make sure you look at all of the costs, both direct and indirect, of moving your production offshore.
Plan how you will manage your offshore team(s). Will you have a good working relationship with your offshore partners? Will there be language or culture barriers to overcome? Do you have the time, money, energy and willingness to build and maintain those relationships, whether it's by phone, email, video conference or in person? Are you willing to hold teleconferences during off hours to accommodate different time zones? Are you willing to travel?
Seek legal counsel. Enlist the help of an experienced lawyer before you commit your business to a new partnership or joint venture, or before you sign any contract(s).
- The Border Guide 8th Edition
- Letters of Credit for Importers & Exporters (UNZ & Co)
- INCOTERMS 2000: The ICC Official Rules for the Interpretation of Trade Rules
- North American Free Trade Agreement: A Guide to US Custom Procedures (UNZ & Co)
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