Getting Started

The goal of this guide is to identify basic requirements for manufacturing in the Asia Pacific Region. (Please note our videos are still a bit China-specific, we are working to update them to reflect our expanding resources in the region.) To ensure success, it is necessary for the client to handle some of these requirements.

Some of the other requirements may be delegated to a capable sourcing company such as Avela Corporation, which has resources available to handle the detail work required to get a job done during the Development Stage.

The Entry Stage marks the critical point when the client is ready to pursue APAC manufacturing in earnest. This is where it is crucial to engage an established and experienced capable sourcing company such as Avela. By leveraging Avela’s regional business relationships, networking and in-country personnel, clients can access sources best fitted to their needs on the best terms.

It is usually advisable to retain a sourcing company for Source Managementduring the actual production. Avela can supply boots-on-the-ground to ensure quality control, handle logistics and deal with any problems that may arise.

Business Plan

The client needs to come prepared with a business plan that defines his or her goals and methods to achieve them. While “making money” may be the base goal, a well-considered business plan is key to achieving it. Manufacturing, in the Asia Pacific Region or anywhere else, entails a product. In some cases, the client may be the consumer of the product, but more often the consumer is a third party and the client needs to have a marketing plan to get the product before the consumer. Working capital is key to any business endeavor and must be a component of the business plan.

Product

While it appears obvious that a client must have a product, it needs to be clearly defined and the scope of a product is not always obvious. Take honey as an example of an apparently simple product. To be sold in the United States it may need to meet certain criteria such as thresholds for purity, independent lab testing and FDA approval, etc. These must be defined. In addition, honey needs a container. The client needs to define the container: will it be glass or plastic? If plastic, what type of plastic? Will it have a separate lid? That must be defined. Will it have a label? That needs to be designed, printed and applied. Will several containers of honey need to be placed in a carton for distribution? The carton must be defined. All these elements comprise the “product.”

Marketing Plan

While marketing is the client’s concern, it is worth discussing here as it may help define the product. For instance, consumer packaging will likely be part of the product if the plan is to be retailed. A marketing plan may determine a target wholesale price for the product, which could scuttle the project if it cannot be met. In addition, developing your marketing strategy will help you consider minimum quantities you will need, leading a realistic financing plan.

Working Capital Plan

Again, this is obvious and it is the client’s concern, but it is beneficial to discuss it here. The client needs to have a full understanding of the capital involved to realize the business plan and to have access to adequate capital at certain milestones along the production process. Without either capital on hand or a plan to get it when needed, the project is not ready to proceed.

 

If the product is fully developed, the client may only need the services of a sourcing company when he or she at the stage of enteringinto China manufacturing. If some amount of product development is still necessary, however, clients may wish to consider engaging Avela on the Development Stage. 

 

 

 

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Of course, the client must have the product concept and it must be clearly defined so that it can be communicated to others. While a sourcing company may be able to help hone the product definition in ways discussed below, excessively vague requirements like “Make it a cheaply as possible” are not useful as starting points.

That said, Avela can review client product details and suggest refinements or efficiencies that can optimize the production process, which usually equates to savings for the client.

Avela can also assist with services such as the creation of detailed drawingsand/or detailed specificationsthat meet manufacturing requirements. Prototypesmay be necessary to establish the expectations of the client, manufacturer and perhaps others such as partners, investors and/or retailers. Avela can assist with prototypes that reflect actual production.

Packaging designsand other detailsfill out the services that Avela can provide in the Development Stage. Whether the client handles these details or enlists Avela’s assistance, the project is ready for Entry Stage services once they are successfully met.

Depending on the amount and complexity of services needed to get a project to the Entry Stage, Avela’s one-time-per-product fees range between $2,500 and $5,000 USD for product development.

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At the Entry Stage, the client’s product is defined to the extent that serious manufacturing quotes can be solicited. (The process may produce some further refinements to optimize the project, but meaningful parameters have been set.)

Avela’s Shanghai team will search China to identify manufacturers capable and well suited for the work, considering factors such as product suitability or production capacity. Avela will then vet candidate sources for quality, reliability and how well they mesh with other aspects of the job, such as their ability to integrate with contributing sources like packaging, third party suppliers, manufacturing supply chain and their access to the most convenient port. Onsite investigations are involved and the process typically takes about four weeks from receipt of payment.

Avela negotiates on behalf of the client for the best terms. We can also facilitate production samples and other items. After the manufacturing contract has been signed, the client may choose to retain Avela for Source Managementservices.

Depending on the amount and complexity of services needed on the Entry Stage, Avela’s one-time-per-product fees range between $2,500 and $5,000 USD for to get the project to a signed manufacturing contract.

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Just as manufacturing in the US is rarely worry free, China manufacturing benefits from representation or boots-on-the-ground management by someone operating on behalf of the client. Source Managementis not complete until the product meets the client’s satisfaction and is safely landed, ready for warehousing and/or distribution.

Source management in China is a bit different from managing work in the US, however. Much of Chinese culture is based on ongoing, personal relationships. They lead to smoother transactions, better terms and more attention to detail. Clients may choose to have Avela leverage its long experience in China sourcing to provide production maintenance services, which include the following

• Relationship management: building trust, securing better terms, handling turnover, developing institutional knowledge
• Quality control: identifying and confirming custom production requirements, robust testing, packaging verification, supply chain management
• Product certification: CE, UL, FDA, etc.
• Logistic coordination: proper harmonized tariff codes, consolidation, correct customs markings, insurance, tracking, etc.

Avela’s Source Management Fees are based on a percentage of the commercial invoice—usually between 8 and 12%.

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Avela’s substantial experience and resources are available for clients who may have started a China manufacturing relationship without our assistance but are experiencing problems that need resolution. If a manufacturing customer is unsatisfied with their existing manufacturing relationship for any reason, Avela can be of service. Our expert and experienced China sourcing team can investigate the matter on the client’s behalf and either resolve the issue or identify alternative sources. If the client desires, we can manage the manufacturing production going forward and head off problems in the future.

Avela’s Source Troubleshooting Servicesare quoted on a per case basis.

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