Designing and developing your own product from scratch is a big job with heavy investment. That said, if the new product you’ve developed is a winner, it will provide you with a major competitive advantage compared to selling products derived from existing designs. If you go the route of creating a new product, you will want to protect your design from being copied by competitors or suppliers, who could turn into competitors.
One way to achieve this is to separate sourcing and production. Sourcing components directly and having them assembled at an unrelated assembly location. In this article we’ll explain some of the benefits for separation of sourcing and production.
Separating sourcing and production is not possible with all product types, but generally with hard goods and electronics, which are assembled from several different components, it can be a good strategy.
Some benefits of this strategy are:
- Cost control – sourcing the components individually provides more granular insight into the cost of each unit and can improve the product cost.
- Potentially lower customs duty – individual components adhere to different custom codes, and oftentimes the tariffs or duties that apply are significantly less than they are on finished goods.
- Local manufacturing. Marketing “Made in USA” (or your home market) – if final assembly takes place in the United States, it might be possible to market the product as “Made in USA” even if the components are produced overseas.
- Reduced risk of product being copied – by sourcing individual components, the component suppliers may not know what your finished product is. If you’re able to prevent your assembly partner in China from knowing the component suppliers, then it would be tougher for them to access any custom parts. If your custom product is made from standard parts, then anyone could buy it and copy fairly easily.
No matter whether you are sourcing finished goods or individual components, Checkpoint’s on-demand China sourcing services can be applied in the same manner to save you time and reduce risk when sourcing from China.
