Over the past few years, many of my consulting clients have asked me to assist them in finding sources or setting up manufacturing in China. Most production companies have learned that in order to stay competitive, they must reduce their manufacturing costs. When these costs have a heavy component of labor, looking for lost-cost alternatives is a matter of competitive survival.

In addition, China has a population of 1.5 billion and a middle class that is growing at a double-digit annual pace. This makes the Chinese market potentially the largest in the world for products and services. Many companies want to take advantage of in-country manufacturing to serve the local markets.

Here are a few more reasons to consider China as the place to manufacture:

• 35-40 percent of the world’s production is already in China. The significant cost benefits are causing manufacturers everywhere to consider alternatives for global production. China is in the midst of an industrial revolution on steroids!
• In a recessionary environment, manufacturers look for cost savings in their organizations. Outsourcing manufacturing or sub-assemblies, or finding Chinese vendors can save you up to 85 percent of your domestic costs. The average savings through sourcing in China are 40-60 percent.
• China is America’s fastest-growing export market. The potential market to sell your products and services in China is enormous. The rapidly expanding Chinese middle class is hungry for Western goods.
• US businesses involved in exporting generally weather downturns in the U.S. economy much better than those businesses that are strictly domestic.

Bear in mind,  doing business in China is tougher than you think. Not only is the culture vastly different, but China’s experience in manufacturing is still developing. It will be a few years before the majority of manufacturers are up to world standards. In the meantime, quality, contract laws, schedules and logistics must be closely monitored. As a result, the things Westerners must do to be successful are far different from dealing with American or European manufacturers. The best way to quickly come up to speed on these differences and how to handle them is to learn from the experience of others.

Rosemary Coates is the President of Blue Silk Consulting. She has been a Supply Chain professional for over 25 years with emphasis on Asia operations. She is the Author of 42 Rules for Sourcing and Manufacturing in China . Email Rosemary at rcoates@bluesilkconsulting.com.