I constantly hear that China manufacturing is cheap only for manufacturing in fairly large scale. Many (most?) Chinese factories are geared up for large orders and large production runs and they oftentimes reject smaller orders or price them prohibitively high. This “go big or go home” mentality/capability also holds true for companies that make a wide variety of the same product. For example, a company that makes ten different kinds of widgets might find itself paying a “small quantity price” for each of the ten, rather than being able to combine all ten to achieve a large quantity discount.
When clients bemoan this sort of pricing, I usually respond with something along the lines of “I feel your pain.“ After today, my response is going to change.
My response is going to change in light of a Financial Times Beyond Brics Blog post, entitled, “Vietnam: Agility Can Beat Scale,” touting Vietnam as a China alternative for small orders and for manufacturing that requires flexibility. The article talks of how Vietnam is capitalizing on its smaller size to win new manufacturing business and it quotes the owner of a pottery business as saying “while China is good at producing the huge volumes that big retailers such as Ikea and Walmart require, Vietnam can be more flexible.” The article goes on to discuss how Western retailers are trying to “distinguish themselves by offering wider ranges,” and of how Vietnam’s smaller scale better enables it to meet “this need for diversity.” The article concludes by noting the beginning of “a wider shift in global manufacturing from a focus on large scale, low-wage production to a more dynamic approach.”
What do you think? China for the big runs, Vietnam for the small?