China View and Challenges for Start-ups

By Scott Miller, Executive Director of AP Manufacturing Group Limited (HK)

There’s been a lot of discussion recently about much of the world’s manufacturing, and specifically the US, moving away from China. Initially this was due to the trade disputes, and it is now a result of the COVID-19 pandemic. In the medical device arena, which is my area of expertise, this is more difficult than it first appears due to the established approved manufacturing facilities and other med-tech-specific requirements throughout the manufacturing system.

Living and working in China for the past 19 years has allowed me to be immersed in its manufacturing and business culture, watching these mature over the years. Even with a recent decline in manufacturing growth, I have seen increasing numbers of smaller consumer and medical device companies looking to China as a viable manufacturing source over its neighboring ASEAN counterparts. This trend is due to robust existing supply chains which continue to make China a strong manufacturing competitor.

For these smaller and start-up organizations, taking the plunge has become relatively easy in terms of finding suppliers; however, finding the “right fit” partners is always a challenge. Meeting customer requirements and minimizing development cycle time and cost are key for a new product to be successful in the marketplace. New and existing development and manufacturing efforts must not only be effective, but also efficient, and the manufacturing partners chosen play a major role in ensuring success. The most critical need of any company engaging in product manufacturing, in China and Asia as a whole, is to ensure visibility and ease of interface between the customer and the manufacturing base.

Considering the full supply chain, not just manufacturing, is critical. Specifically, important areas to focus on include:

• Suppliers are an extension of your operation and must be properly managed. Ensuring stable connectivity, good visibility and clear communication interfaces will help to streamline development cycles, reduce costs and accelerate production times.
• Transport logistics are playing an increasingly important part in delivery of product on time from manufacturing facilities, especially as import tariffs and controls start to play a part in the timing of shipments.
• Creating a back-up plan, by having standby, secondary manufacturing facilities identified, with agreements in place and ready to turn on if required, will increase your supply chain’s resilience.