Small Business: Overseas manufacturing - Adam Bennett

Adam Bennett, NZTE Customer Director.

Adam Bennett, NZTE Customer Director, who focuses on China as a manufacturing location

You have invented your widget and you want to compare the price of manufacturing it in New Zealand and overseas. How do you find out where other widgets like yours are made overseas?

The first step is to undertake some market research, looking at the costs and requirements for different markets, and to identify what your competitors are doing and where. If it is still an idea, you can search different patents to see where patent holders are located. NZTE has some initial advice about starting market research on our website, along with comprehensive information about doing business in China, including a wide range of information about finding a manufacturer and a location, the pros and cons of manufacturing in China and some options to consider for manufacturing in China.

Would you recommend trade shows as a good place to find manufacturers for your product?

Trade shows offer different things to different businesses. Generally we recommend shows as an opportunity to either promote your products or to see what other companies are offering in the market, but not as a sole means of sourcing a new manufacturer.

What should a NZ business be looking for in a good overseas manufacturer?

Manufacturing in China specifically is a huge investment for most New Zealand businesses and the cost of getting it wrong can be crippling, so it is important to get advice from experts and specialists who understand China, know your company and your needs. NZTE is one source of information, and we have a wide range of information about doing business in China on our website, including some specific points for finding a manufacturer. You can also contact us to discuss your plans. We also recommend using specialist agencies and consultancies, but caution companies to also do due diligence on these as well, including any China "affiliates" they may have. Employ ones based in China or who travel to China on a regular basis, and don't forget to contact Kiwi companies and individuals who have "been there, done that" in China and are willing to help newcomers.

You have found a good overseas factory. How often do you want to visit them and check for quality assurance?

Manufacturing overseas is a big commitment for any company, and having people permanently in the market working alongside your manufacturer and controlling the overall quality of manufacturing is strongly recommended. The first three to six months of any relationship is critical, so if a permanent presence in the market is not practical, we recommend investing in having a senior person based in the market for a few months at the beginning. We also suggest hiring in-market quality inspection service providers.

How do you make sure that the factory isn't copying your designs for other customers?

In China, you need to be prepared for everything and anything. To mitigate any copying, we recommend:

• Developing a clear IP plan and budget before you start any local manufacturing,
• Registering your IP in China, including product design, trademarks, and patents.

China's IP laws are different from New Zealand's - China has a first-to file system that requires no evidence of prior use or ownership.

NZTE can provide a list of IP advisors who you can work with in the market.

For more information about doing business in China including manufacturing there, please visit nzte.govt.nz.

Next week: Many small businessses are extremely proud of their company culture and it's something they establish very early on. But what happens when your company gets bigger and the boss gets spread ever thinner. How do you protect and continue to nurture that small business culture?