Of all the manufactured products in the world, 48% of goods are made in China, the United States, and Japan. It only takes three countries to create nearly half of the world’s products.
If you’re a product entrepreneur, you have an important question to answer. Where do you want your products to be manufactured?
You can choose either domestic manufacturing in the U.S. or overseas production. Read on to learn about your options and how this choice can impact your business.
Domestic Manufacturing Vs. Overseas Manufacturing
If a company has a domestic manufacturer, it means that the products are made in the company’s home country. The goods are also sold in the same country.
Overseas manufacturing happens when a company moves it’s production to a different country. But, the products that are built at this new location won’t be sold there.
The products will be sent back and sold in the company’s home country.
Cost of Labor
Overseas production is generally much cheaper than domestic. Offshore workers don’t have to be paid as much as U.S. workers, which will help your bottom line.
Plus, many other countries offer tax breaks and incentives to save you even more money. The materials needed to make your product might also be cheaper in a different country.
But, high shipping costs and a complicated import process can offset the benefits. You’ll save on labor costs, but you might end up with expensive transport and legal fees.
Intellectual Property Rights
No matter what kind of product your company makes, that design didn’t happen overnight. Your design is intellectual property so it is likely protected by a patent, copyright, or trademark.
A U.S. manufacturer is a safer choice if you want to protect your intellectual property. Domestic manufacturers have strict protections that prevent other companies from copying your design.
Overseas manufacturers do not offer these same intellectual property protections.
Production Reliability and Product Quality
If there’s a time-sensitive demand for your products, a domestic manufacturer might be a better choice.
Suppose a customer searches for an industrial generator for sale that they need immediately. They might choose a domestic company over an offshore company. They can expect faster delivery because the product won’t need to travel as far.
Since the U.S. has stricter labor and quality standards than other countries, a domestic manufacturer might also deliver a better product.
Ethics and Public Image
Domestic production is considered a more ethical choice because it pays workers a livable wage. It also contributes to the U.S. economy by creating manufacturing jobs.
Choosing a domestic manufacturer can also improve your company’s public image. According to an Associated Press poll, 75% of Americans would prefer to buy a product made in the U.S., but only 30% would pay more for it.
Overseas manufacturing can mean lower wages for workers and a massive carbon footprint due to long shipping distances. If you choose offshore production, you could lose customers over these issues.
Make the Right Choice for Your Business
As a product entrepreneur, your largest business expense will be manufacturing costs.
Both overseas and domestic manufacturing has positives and negatives. There isn’t a one-size-fits-all option for every business. It truly depends on your company’s budget and values.
To read more articles on business, keep browsing our blog.