If you want your product to be competitively priced you probably want to consider manufacturing overseas. But how do you find a factory? How do you vet the location, workers and management? Where do you look first? They're questions Fitness Cubed cofounder Arnav Dalmia has asked and answered in bringing Cubii, an app-connected under-desk elliptical, to fruition. Here's what he learned along the way.
1. Form partnerships instead of treating Chinese connections as suppliers.
Companies in the U.S. tend to think about Chinese manufacturers as entities that need to be told exactly what to do. In reality, these manufacturers have been operating for years and know quite a bit about how to do it right. "The biggest boon for us was taking advantage of all of the experiences that they had gathered over the years," he says. "Treat them as partners, because at the end of the day if you benefit then they benefit, as well."
2. You need to actually go there.
Doing business in China is highly relationship-based and you need to see with your own eyes what kind of environment your products will be produced in. One factory Dalmia visited had poultry and livestock roaming around--something he wouldn't have known unless he had had his feet on the ground in China. Being there in person also gives you an opportunity to catch mistakes. Dalmia, for example, spotted workers boxing up the wrong colored Cubiis. "I just happened to catch that while I was just touring the assembly line," he says. "If I hadn't you can imagine what kind of a disaster it would have been if they put in the wrong colored Cubiis into the wrong boxes."
3. Protect your intellectual property.
Chinese companies are adept at replicating what others are doing. To safeguard your IP it can help to break up your supply chain so you're not overly dependent on one partner. For Fitness Cubed it meant having electronics, plastics and metals all sourced from different factories and sent to a different location to be assembled. "No single factory knew what the final product was, so it was impossible to copy," he says.
4. Have a local Chinese contact.
It will save you a lot of time working with someone who knows what a city has to offer, can help you find different factories and give advice on how to proceed. To find this person ask other U.S. companies already established with manufacturers in China for people they would recommend. "In our case we had a few investors who had made physical products, and they introduced us to their contacts," he says.
5. Expect to spend several months getting established.
"It took us about seven or eight months, in total, to nail down the right partner who we wanted to work with," he says. "The first few months we were just talking to a bunch of people and meeting with different factories. After we had decided who to work with we spent another three to four months when the product was actually manufactured."