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Manufacturing in China vs USA: Discover how China can ‘work’ for you!

Staff and infrastructure costs in the US vs China What brand owners importers and manufacturers need to know

Comparing manufacturing in China vs USA

During my 20 years living in Asia, I’ve owned a number of different business entities in greater China, ranging from China WFOE’s to HK holding companies to virtual offices. In some cases the teams were set up to sell to China and in other cases we were buying from China.

China is not only a massive market but it changes rapidly, so I don’t claim to be an expert on all aspects of your China business; and anybody that claims to know “everything about China” should not be taken seriously! I’ve had my share of success as well as failure, and in this whitepaper I’d like to share some of the key lessons, pitfalls and best practices that I learned the hard way when answering the deceptively simple question of “how much does it cost to hire staff and rent space in China?”.

Read on to find out what you can expect from this whitepaper and how it will benefit you…

“What can you expect?”

This whitepaper covers the following:

  • Factory and office staff: Comparison of US & China
  • Labor rates explained
  • Work hours explained
  • Mandatory benefits explained
  • Taxes explained
  • Severance explained
  • 12 month forecast for wages, rents and the RMB exchange rate
  • Options for outsourced manpower and infrastructure

“How will you benefit from this whitepaper?”

While the concepts discussed in this whitepaper may be of interest to anyone that wishes to do business in China, regardless if you are on the buy or sell side of the transaction with China. Readers who are thinking about setting up their own offices or factories in China will find the white paper particularly useful.

This probably isn’t the first article you’ve read about China business. So to provide real value for the readers, in addition to some of the “you probably know already” stuff included in this whitepaper that is common knowledge and generally agreed among experienced China business professionals, I have added the following bonus sections:

  • “You may not know” provides insider information that comes with 20 years’ experience serving on both sides of the buyer-seller relationship in China.
  • “Dangerous not to know” may or may not be common knowledge, but you better be aware of it either way.

“How do you get your own copy of this whitepaper?”

Download “Staff and infrastructure costs in the US vs China: What brand owners, importers and manufacturers need to know” to discover the costs behind moving your manufacturing operations to China, and how it will help you to maintain your brand’s competitive edge. Simply click the button below to get your own FREE copy.

 

China sourcing: Purchasing manager’s salary in China and USA

Average us purchasing manager salary 2014

According to US Census Data in 2014, the average annual salary (exclusive of bonus and benefits) for a Purchasing Manager is USD 90,558. Their Chinese counterpart earns less than a 1/3 of that amount.

A US-based manager with even basic Asian language skills and Asian sourcing experience will command an even hirer salary. Additionally, a team of managers and support staff will need to be hired, trained and supervised if there is a desire to have the in-house resources needed to manage an international supply chain.

Spending time in Asia at the factory is almost a pre-requisite for success, but the cost of sending staff to Asia on multiple business trips can be cost prohibitive. The figures above are for direct salary only. All in cost to the American company to hire staff in the USA is significantly higher after bonus, overheads, mandatory benefits and other in-direct costs are calculated.

According to Fiducia in their report on HR costs in China for 2014, the average salary across all industries in the Guangdong providence is 4200 RMB per month. Even after adding bonus, mandatory benefits, dorm/housing and meal allowance, the direct labor is still under 15,000 USD per year.

2014 avg salary china

That number may sound very attractive but know that the “average person” didn’t attend university, doesn’t speak English and has very little international trade experience. A review of the internet job forums in China will show that a Chinese manager with a university degree and 5 years’ experience in general sourcing or trading can earn around 12,000 RMB per month in a major Chinese city. Candidates with specialized skills can earn much more.

Even at around $30,000 a year for an experienced Sr. Chinese manager, the cost is still a fraction of the funds needed to engage professional staff in a developed economy like N. America, EU and Australia/NZ.

The advantages of outsourcing Supply Chain Management to a lower cost country is two-fold:

Significantly reduced HR costs

Physical proximity to supply base

So why isn’t everybody opening an international purchasing office in Asia?

Almost all small-medium sized firms and even the majority of large buyers don’t actually set up their own office in China because hiring and managing a team in China is no easy task from a culture, administrative, legal, linguistic and economic point of view.

For those reasons, China-based agents are often engaged and there has been an explosion in the number of China sourcing agencies over the past 10 year. Unfortunately, there is a lack of professionalism, transparency and experience among these China based agents. Far too much overpromising and under-delivery.

A Chinese or Foreign owned sourcing agency will charge between 3% and 15% of the PO value to perform various services at various levels of (un) professionalism. These agents often receive hidden kickbacks from the factory. As a result, the so-called “buyer’s representative” is actually working for the factory!

Related content: Visit our FAQ page to see what is really happening if your agent offers to do the sourcing for free