China Potential Savings

How much can I expect to save by moving production to China?

There is no set formula but there are general rules that apply. Labor intensive products made of readily available materials offer the greatest savings. Products with specialized materials which need to be imported into China may not encounter larger price reductions by moving overseas. Other major issues to consider are shipping and duties. PassageMaker looks at the total supply chain, door to door, to ensure savings are achieved.

In one instance we reduced the cost of a complex toy from $122 to $18!

What about tooling charges or mold set up fees?

Generally speaking, you can expect tooling for production runs in China to cost 1/3 to 1/2 as much as in the US or Europe. Expect savings in the 25% - 40% range on tooling built for production runs in N. America or the EU. (The differences in tooling for domestic use and tooling for export are explained in the next section below) Generally, the more expensive the tooling back home, the greater the savings that can be expected in China.

During the Request for Quotation (RFQ) phase, it is essential to pay close attention to the tooling costs in addition to the unit price. It is not uncommon for "tooling hustlers" to give a great unit price to get your business, only to find out later that the tooling cost has been inflated. Proper research will identify not only the best unit price at a national level, but also what is the going rate on the required tooling.

Many parameters can affect the price of the given tool & die or mold. Take plastic injection mold tooling for example. Chief among these parameters are:

• Required tool life
• Number of cavities
• Core and cavity insert material
• Complexity of the product
• Product size
• Tolerances
• Runner system

Can the Chinese tooling be transferred to the USA (or other non-China locations)?

Tooling that has been built for production in China is generally not intended for export at a later time. The foremost reason for this is that the tooling would not have been initially designed for use on the customers' injection equipment and the tooling may not even fit. Also very important is the fact that the tooling will not have been built to Export standards. Many of the replacement parts (ejector pins, etc.) may not be standard size and would have to be custom manufactured. Lower cost (and softer) Chinese materials may have been used in construction, reducing the life of the tool.

Hose connections may not mate with your overseas machinery and inlets/outlets, if marked at all, may be written in Chinese. If the customer has any future plans to move the tooling to the US at some later date, it is very important to specify that in the beginning before production begins. Please visit www.psschina.com for more details and if you need assistance.

Learn more about Mike and PassageMaker at www.PSSchina.com.