When Should You Outsource to Asia?

'fu' or 'good luck' in English. Outsourcing to Asia can save you lots of money.

I don’t believe there is any precise time when a small business should outsource the production of their products to Asia; instead, outsourcing should be done when the entrepreneur is comfortable and ready for a process that may be daunting and time consuming.  Despite this, we all know outsourcing can be very rewarding.

Why Outsource?
1. Save Money
2. Make products or obtain services not being manufactured or offered in the country your business is in

The above two reasons are really the only reasons you would outsource.  But these reasons are obvious, and because all entrepreneurs want to save money, deciding when to outsource is not a ‘why’ but a ‘when’ question.

When Outsource?
1. When you produce enough to make it cost effective
2. When you need to make a product or obtain a service not offered in the country you are in
3. When somebody joins your team that has experience with sourcing overseas
4. When you feel comfortable with the process

The first point on the above list on when to outsource is very vague and will vary from case to case.  There are two factors that influence whether or not outsourcing is cost effective. These factors are:
1. The quantity of product or service you are seeking
2. The amount it costs you to import it to your home country
There is no set quantity that makes outsourcing cost effective, and sometimes it may even be cheaper to produce a small amount of a product overseas. However, on other occasions it may only be cost effective to produce huge quantities.  The amount it costs you to import a product or service also varies.  Different products have different import taxes.  Also, different products are different sizes and weights and the shipping costs will therefore vary.

I, however, have never had a big problem with outsourcing, and even when producing small quantities it has been cost effective for me to source production overseas.

In fact, ever since I began Sand Shack I have been outsourcing the production of our products to China, Thailand, India and the Philippines.  At the beginning I was only making and importing around 50 pieces of one style of jewelry, but even then I knew I was saving money by manufacturing my products in these more favorable markets.

However, not everybody is as comfortable as me when it comes to outsourcing products to Asia, so I don’t expect every entrepreneur to decide to outsource production after reading this.  I grew up in Japan and Singapore, and therefore, feel very comfortable outsourcing my products to that side of the world.  I have been able to leverage not only my fluency in Mandarin Chinese, but also my cultural understanding of the people who are making my products, to successfully outsource anything from hats to umbrellas.

The truth about outsourcing is that you don’t have to wait until you are generating 1 million in revenue a year, you don’t even have to wait until you are making 50k, you can outsource whenever you want as long as you are comfortable with the process and save money.

You can outsource without the help of an expert.  Although the fourth point in the above list on when to outsource is ‘outsource when somebody joins your team that has experience with sourcing overseas’, this is not imperative.  Most overseas manufacturing facilities have English speaking sales teams that will communicate with you through email about your project.  They will be able to give you ample support, which includes making a sample of your product before you commit to using them for production.  Although a future article will have to address HOW to outsource, I will say here:

“Anybody Can Outsource.”

Do you have a product you want to make overseas but have questions? Post a comment at the end of this article and I will be sure to address it? The same goes for people who have outsourced, what have been your experiences?