Hardware startups should consider local manufacturing

I know some people that started a company that makes GPS receivers for avionic use (any pilot will likely be able to name them). I heard them explain their rationale for manufacturing in China, and IIRC it wasn't related to cost—in fact, they said that cost was comparable to domestic production. Rather, the main advantage was the ability to source components, such as the Apple-specific connectors they have to use. Of course, there are difficulties inherent to working with a manufacturer that's half a world away (miscommunications, timezones, travel, etc.), but they determined that it was still the best way to manufacture their product.

China especially has manufacturing centers where just about any component can be sourced within a few hours, rather than waiting for parts to be shipped from around the country (if not the world).

China has a huge edge in electronics manufacturing, and it's not because of cost (anymore). If we ever hope to compete, we'll likely need to promote such a domestic manufacturing ecosystem via extra-market means.

I know some people that started a company that makes GPS receivers for avionic use (any pilot will likely be able to name them). I heard them explain their rationale for manufacturing in China, and IIRC it wasn't related to cost—in fact, they said that cost was comparable to domestic production. Rather, the main advantage was the ability to source components, such as the Apple-specific connectors they have to use. Of course, there are difficulties inherent to working with a manufacturer that's half a world away (miscommunications, timezones, travel, etc.), but they determined that it was still the best way to manufacture their product.

China especially has manufacturing centers where just about any component can be sourced within a few hours, rather than waiting for parts to be shipped from around the country (if not the world).

China has a huge edge in electronics manufacturing, and it's not because of cost (anymore). If we ever hope to compete, we'll likely need to promote such a domestic manufacturing ecosystem via extra-market means.

> why do small startups choose to manufacture in China to begin with?

It's a variation on the premature optimization theme.

They think they will be volume buyers so they outsource the development to the same place that will be doing the manufacturing (China, usually).

But they forget that the design is a very interactive process and that manufacturing is much less so if you just outsource at 'board level'.

The story earlier about 'one-wheel' was a pretty good example of how you should start up your manufacturing. I'm sure that once they hit the volumes where outsourcing makes sense they'll do so but by then they will have an excellent idea of how to set up a quality control pipeline around their product to make sure they will continue to deliver quality products.

What type of cost difference are we talking about? I am aware some countries you can import a finished good and pay not as much, import TAX wise compared with a far higher cost to import the components needed. There in is the crux I believe for many countries. The access to the components needed at a competitive price and that is without the production cost.

Though would you pay a bit more for something made locally? I would and certainly makes an appeal for many. Now if only there was a way for TAX to fix this and make local production competative and for me the only way is to impose some green TAX factoring in all that extra travel. Though many components are not made local, so that may even cost out cheaper to make abroad still.

But the feel of buying something made locally or at least in your own country/continent does have a monetary premium that many would accept.

What type of cost difference are we talking about? I am aware some countries you can import a finished good and pay not as much, import TAX wise compared with a far higher cost to import the components needed. There in is the crux I believe for many countries. The access to the components needed at a competitive price and that is without the production cost.

Though would you pay a bit more for something made locally? I would and certainly makes an appeal for many. Now if only there was a way for TAX to fix this and make local production competative and for me the only way is to impose some green TAX factoring in all that extra travel. Though many components are not made local, so that may even cost out cheaper to make abroad still.

But the feel of buying something made locally or at least in your own country/continent does have a monetary premium that many would accept.