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Domestic v. International Manufacturing for Your Startup
Whether you are considering having your product manufactured in your home country or overseas, you need to take into account the benefits and disadvantages of each before reaching a final decision. Each item on your list should be weighed based on your startup’s goals, mission, customers and timeline. Below you will find a preliminary pros and cons list to help you get started.
Domestic Manufacturing Advantages
- Easier Communication. When you and your manufacturing partner share the same language, you are less likely to experience communication barriers and breakdowns. When communication is a challenge, it can be costly for your startup.
- Visit the Facility. When your manufacturer is close, you are easily able to visit the factory and build a trusting relationship with your manufacturing partner.
- Faster Fulfillment. When you don’t have to factor in international shipping, your product will most likely be available much quicker, which means that you can get it to market faster.
- Production Flexibility. Domestic manufacturers are usually able to accommodate smaller production runs. While an international manufacturer might be able to offer a smaller production run, shipping can make it cost prohibitive.
- Reduced Shipping Fees. If you intend to sell your product domestically, you will be able to save money on shipping costs.
- Positive Press & Market Perception. The American public tends to view products made domestically as superior in quality and is therefore willing to pay more for your product.
- IP Security. Intellectual property (IP) can make or break a startup. Copycat products not only hurt your brand, but they can also harm consumers. Manufacturing your product domestically may decrease the chance of intellectual property theft.
Domestic Manufacturing Disadvantages
- Higher Costs. Manufacturing your product domestically usually means that you will be paying more for your product. U.S. labor laws require manufacturers to provide minimum wage for workers along with safe working environments.
- High Volume Production Issues. Manufacturers are not as well equipped to produce high volume orders as their international counterparts.
International Manufacturing Advantages
- Reduced Costs. Manufacturing a product overseas is almost always significantly less expensive than manufacturing domestically.
- Increased Options. In the U.S. manufacturers tend to specialize in the products they can produce, whereas in China a manufacturer might be able to produce a wide range of products. There are also more factories in China which means you have options, helping to keep prices competitive.
- High-volume Capability. International manufacturers excel when it comes to producing high-volume orders in a single production run.
International Manufacturing Disadvantages
- Communication Barriers. By not sharing a language or native culture, navigating business can be a bit more challenging.
- Challenging to Find. Not all international manufacturing facilities have a website, or keep up with the Google algorithm—which means that finding them on the internet can be a challenge. Also, the facilities that do have a website and provide contact information are most likely contacted very frequently by people “testing the waters”, so they may not respond to your email in a timely manner, or at all.
- Limited Oversight. It is always a good idea to visit a facility before entering into a contract, however this can be a challenge with international suppliers. You might make the initial trip to visit the facility, but subsequent visits can quickly add up and could be cost prohibitive for your startup.
- Increased Shipping Fees. When you intend to sell your product domestically, having your product shipped from their international facility to the U.S. can be costly. Increased tariffs and other political factors can make predicting shipping fees a bit challenging, and these fees can readily fluctuate.
- Less Secure IP Rights. Without the protections of U.S. intellectual property rights, your product is vulnerable to IP theft and copycats flooding the market.
Ultimately the decision to manufacture either domestically or internationally is based on your budget, timeline and customer preferences. With our heightened political climate and a shift in attitude, many people now prefer to buy products that are made in the U.S., and are willing to pay more for these products.
Do you have additional questions about manufacturing your product? Send us an email at firstname.lastname@example.org
3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.