This post looks at the two most common product development choices, with a focus on how they impact the transition to mass production. At this stage, the foreign company has typically approved a final prototype -- or it is close to that stage -- and it it looking at going into mass production with their Chinese manufacturer.
China product development is fraught with risks. This post explains the two main product development models employed by Chinese companies and explains the advantages and disadvantages of both. I am writing about product development here because in my experience and that of my company, the product development stage is both the easiest and mostly likely time for your Chinese counterparty to run off with your IP or even your product.
My law firm represents many foreign companies that do OEM manufacturing around the world — mostly China, but India, Mexico, Brazil, Vietnam, Thailand, Taiwan, Korea, Malaysia, Indonesia, Bangladesh, and Cambodia as well. In our discussions with our clients that manufacturing in foreign countries, we nearly always discuss what they can and should be doing to
Last week a relatively large company emailed me to ask what our law firm charges for “template Thailand and Vietnam Manufacturing Agreements.” A few hours later, I got the same request from a different company for Mexico. In response to these emails, I explained why we never do “template” manufacturing agreements anywhere in the world
The year 2021 began with high hopes for international trade as many thought the incoming Biden Administration would undo many of the unprecedented trade actions taken by the Trump Administration and reset U.S. trade policy. However, at the end of 2021, most of the Trump tariffs remain in effect and the Biden Administration has largely pushed trade issues to the back burner. Here, we take a look at some of developments on the Trump tariffs this past year and what to expect for those tariffs in 2022.
Contract manufacturing is fundamentally the purchase of a product. For any product purchase, the key terms are price, quantity and delivery date. And yet many buyers treat these key term as secondary issues. As buyers focus on exciting issues like product design and "getting to market", buyers frequently fall into a trap. They assume that price, quantity and delivery terms will never be an issue. When these issues arise, as they virtually always do, the product buyer is in a situation where it has little to no room to negotiate. The overseas factory is now in control, and then it springs the price trap.
It should go without saying that international product manufacturing costs are key for nearly all companies that manufacture in or secure their products from a foreign country. Most companies that manufacture in China would love to move their manufacturing out of China. But doing so is difficult for nearly all, and impossible for many. Product manufacturing costs are a huge factor in choosing a location for product manufacturing or outsourcing. Over the last year, I have had probably more conversations about where companies should manufacture their products than in the prior five years combined. And those conversations have reminded me that many companies have too narrow a definition of product costs.
How to Lock in Product Prices with Overseas Manufacturers to avoid NOT getting your products when you need them most. The three key issues in nearly all the contract manufacturing agreements we draft (be they for China, Vietnam, Pakistan, Mexico, Thailand, Malaysia, Indonesia or wherever) are 1) price, 2) quantity and 3) delivery date. Yet many product buyers that have their products manufactured overseas focus so much on issues like intellectual property protection and control of molds, that they neglect these three key issues.
Moving manufacturing from China to Mexico or Poland will help the world by reducing energy consumption and pollution. Sourcing products from China has all sorts of hidden costs. This post focuses on the environmental costs. I my next post, I will discuss various other "hidden costs" that come from China sourcing, beyond just the environmental ones.
How to handle China factory disputes is a question our international manufacturing lawyers have been getting a lot of lately. Many China factories are in deep trouble due to declining sales stemming from the US-China Cold War, from its energy issues, and from its declining economy. I say this not just because of the economic statistics everyone sees, but also on the steady stream of emails our international manufacturing lawyers are getting from foreign companies reporting the usual range of problems whenever China's factories are suffering. See China's Slowdown and You.
