Hardware startups should consider local manufacturing

https://medium.com/@senic/made-locally-5f495a822d44

by twald • 12 years ago

68 92 12 years ago

Great points - thanks Tobias!

teamhappy• 12 years ago

I've been thinking about this just the other day. The context then was locally grown weed in the US and the implications of that for farmers in South America. Wouldn't we be better off distributing the "workload" evenly across the planet?

delecti• 12 years ago

International drug trafficking laws are almost definitely a bigger factor in the consideration of where to grow legalized medicinal/recreational cannabis than cost, especially considering it grows so readily in so many different climates.

davidw• 12 years ago

Probably not: http://en.wikipedia.org/wiki/Comparative_advantage#Ricardo.2...

To take your pot example, there are places where it grows well, and places where it's not so easy to grow. It's better for everyone if it's grown in the easy places, and traded for goods that are more easily produced in the 'not so easy' places.

That's the theory, at least. Naturally, that specific example also has a lot of legal issues surrounding it!

amckenna• 12 years ago

I have backed a half dozen Kickstarters and Indigogos that were hardware based (consumer electronics) and chose to manufacture in China. Seeing the time and money they spend in order to fly someone over to China to troubleshoot and issue with manufacturing or testing has left me wondering - why do small startups choose to manufacture in China to begin with?

JonFish859• 12 years ago

My guess would be that it starts with the assumption that "China is cheaper", and that makes for an easy story to tell to investors "we're making XYZ in China!". The second you say "we're making it in Texas", it opens you up to questions of "isn't that expensive?"

On the face of it, I'm sure the up-front quote from a Chinese manufacturer is cheaper than something in the USA. Where costs skyrocket is when something goes wrong: the parts are wrong, the products aren't ready on time, something was done incorrectly, etc. If you don't have a manufacturer you can trust, one of those will happen, and is almost impossible to diagnose from the US.

Even if all of that works out, there are other things to consider: costs (and time) of shipping. Want it in a week? Well, get ready to pay. Even if you ship it air freight consolidated, it's still not cheap. If you want it on a boat, there's a good chunk of time to think about.

On top of THAT, there are all sorts of fun import tariffs and such to deal with (at least on the US side). Get ready to front money for an import bond, for starters! And there may already be some hidden costs of importing into the US: if you use some TI parts that have to be imported into China, you're going to be paying taxes twice.

A lot of those things are likely not looked at in the low quote from a Chinese manufacturer. They're costs that can/will show up later along the line.

JonFish859• 12 years ago

A lot of those things are likely not looked at in the low quote from a Chinese manufacturer. They're costs that can/will show up later along the line.

JonFish859• 12 years ago

A lot of those things are likely not looked at in the low quote from a Chinese manufacturer. They're costs that can/will show up later along the line.

JonFish859• 12 years ago

A lot of those things are likely not looked at in the low quote from a Chinese manufacturer. They're costs that can/will show up later along the line.

jacquesm13• 12 years ago

It's a variation on the premature optimization theme.

They think they will be volume buyers so they outsource the development to the same place that will be doing the manufacturing (China, usually).

But they forget that the design is a very interactive process and that manufacturing is much less so if you just outsource at 'board level'.

The story earlier about 'one-wheel' was a pretty good example of how you should start up your manufacturing. I'm sure that once they hit the volumes where outsourcing makes sense they'll do so but by then they will have an excellent idea of how to set up a quality control pipeline around their product to make sure they will continue to deliver quality products.

jacquesm13• 12 years ago

It's a variation on the premature optimization theme.

They think they will be volume buyers so they outsource the development to the same place that will be doing the manufacturing (China, usually).

But they forget that the design is a very interactive process and that manufacturing is much less so if you just outsource at 'board level'.

JonFish859• 12 years ago

A lot of those things are likely not looked at in the low quote from a Chinese manufacturer. They're costs that can/will show up later along the line.

jwr4• 12 years ago

It's because the market has become incredibly price-driven, especially the consumer electronics market.

People have seen the prices for Chinese-manufactured gizmos, and now there is an expectation that any new device will be priced similarly. Nobody takes into account that the device the hardware startup is building is innovative and likely much better (more complicated) than the existing gizmos, and that the hardware startup is nowhere near the volumes required to get low pricing. As a result, there is a pressure for lower prices, and lower priced electronics are only attainable in China (for the time being).

This is somewhat similar to what seems to be happening in the mobile app business: there is a race to the bottom and common expectation is that an app won't cost more than a couple of dollars.

I think the author of the article is right: at low volumes, when you do R&D and iterate, you won't even get the economies of scale that China can provide. The problem is that it isn't always possible to manufacture locally, because local manufacturers might not be ready for your low-volume, inexperienced business.

jacquesm13• 12 years ago

It's a variation on the premature optimization theme.

They think they will be volume buyers so they outsource the development to the same place that will be doing the manufacturing (China, usually).

But they forget that the design is a very interactive process and that manufacturing is much less so if you just outsource at 'board level'.

jwr4• 12 years ago

It's because the market has become incredibly price-driven, especially the consumer electronics market.

This is somewhat similar to what seems to be happening in the mobile app business: there is a race to the bottom and common expectation is that an app won't cost more than a couple of dollars.

jacquesm13• 12 years ago

It's a variation on the premature optimization theme.

They think they will be volume buyers so they outsource the development to the same place that will be doing the manufacturing (China, usually).

But they forget that the design is a very interactive process and that manufacturing is much less so if you just outsource at 'board level'.

jwr4• 12 years ago

It's because the market has become incredibly price-driven, especially the consumer electronics market.

This is somewhat similar to what seems to be happening in the mobile app business: there is a race to the bottom and common expectation is that an app won't cost more than a couple of dollars.

jacquesm13• 12 years ago

It's a variation on the premature optimization theme.

They think they will be volume buyers so they outsource the development to the same place that will be doing the manufacturing (China, usually).

But they forget that the design is a very interactive process and that manufacturing is much less so if you just outsource at 'board level'.

JonFish859• 12 years ago

A lot of those things are likely not looked at in the low quote from a Chinese manufacturer. They're costs that can/will show up later along the line.

jacquesm13• 12 years ago

It's a variation on the premature optimization theme.

They think they will be volume buyers so they outsource the development to the same place that will be doing the manufacturing (China, usually).

But they forget that the design is a very interactive process and that manufacturing is much less so if you just outsource at 'board level'.

jacquesm13• 12 years ago

It's a variation on the premature optimization theme.

They think they will be volume buyers so they outsource the development to the same place that will be doing the manufacturing (China, usually).

But they forget that the design is a very interactive process and that manufacturing is much less so if you just outsource at 'board level'.

jacquesm13• 12 years ago

It's a variation on the premature optimization theme.

They think they will be volume buyers so they outsource the development to the same place that will be doing the manufacturing (China, usually).

But they forget that the design is a very interactive process and that manufacturing is much less so if you just outsource at 'board level'.

JonFish859• 12 years ago

A lot of those things are likely not looked at in the low quote from a Chinese manufacturer. They're costs that can/will show up later along the line.

jacquesm13• 12 years ago

It's a variation on the premature optimization theme.

They think they will be volume buyers so they outsource the development to the same place that will be doing the manufacturing (China, usually).

But they forget that the design is a very interactive process and that manufacturing is much less so if you just outsource at 'board level'.

jacquesm13• 12 years ago

It's a variation on the premature optimization theme.

They think they will be volume buyers so they outsource the development to the same place that will be doing the manufacturing (China, usually).

But they forget that the design is a very interactive process and that manufacturing is much less so if you just outsource at 'board level'.

jacquesm13• 12 years ago

It's a variation on the premature optimization theme.

They think they will be volume buyers so they outsource the development to the same place that will be doing the manufacturing (China, usually).

But they forget that the design is a very interactive process and that manufacturing is much less so if you just outsource at 'board level'.

Zenst8• 12 years ago

What type of cost difference are we talking about? I am aware some countries you can import a finished good and pay not as much, import TAX wise compared with a far higher cost to import the components needed. There in is the crux I believe for many countries. The access to the components needed at a competitive price and that is without the production cost.

Though would you pay a bit more for something made locally? I would and certainly makes an appeal for many. Now if only there was a way for TAX to fix this and make local production competative and for me the only way is to impose some green TAX factoring in all that extra travel. Though many components are not made local, so that may even cost out cheaper to make abroad still.

But the feel of buying something made locally or at least in your own country/continent does have a monetary premium that many would accept.

Zenst8• 12 years ago

But the feel of buying something made locally or at least in your own country/continent does have a monetary premium that many would accept.

Zenst8• 12 years ago

But the feel of buying something made locally or at least in your own country/continent does have a monetary premium that many would accept.

Zenst8• 12 years ago

But the feel of buying something made locally or at least in your own country/continent does have a monetary premium that many would accept.

Zenst8• 12 years ago

But the feel of buying something made locally or at least in your own country/continent does have a monetary premium that many would accept.

JonFish859• 12 years ago

A lot of those things are likely not looked at in the low quote from a Chinese manufacturer. They're costs that can/will show up later along the line.

Zenst8• 12 years ago

But the feel of buying something made locally or at least in your own country/continent does have a monetary premium that many would accept.

Zenst8• 12 years ago

But the feel of buying something made locally or at least in your own country/continent does have a monetary premium that many would accept.

Zenst8• 12 years ago

But the feel of buying something made locally or at least in your own country/continent does have a monetary premium that many would accept.

JonFish859• 12 years ago

A lot of those things are likely not looked at in the low quote from a Chinese manufacturer. They're costs that can/will show up later along the line.

stcredzero• 12 years ago

it opens you up to questions of "isn't that expensive?"

I suspect that if one has a secondary goal of increasing local employment and benefitting the local economy, then the PR side could be managed in a way that allays that. It would have to walk a thin line bordering the exploitation of the underclass in blighted urban areas.

Maybe a "hybrid" approach would have tremendous benefits? How about an organization of local makers that also had language and cultural skills to enable it to work closely with and maintain solid relationships with reliable manufacturers in China? (Or maybe Mexico?) Local workers would handle prototyping and rush orders, but work with foreign manufacturers to reduce the cost as volumes increased. Such an organization could also be used to economically empower people in the local community. (Such efforts work most reliably when small numbers of new members can be acculturated by the majority of established members.)

My experience of several years ago, bringing a chinese-made laser cutter to my old hackerspace, is that all of the small-time people flaunt most of the customs stuff. In fact, if you are concerned with the possible jail time for not obeying this or that regulation, your friends in China may well tell you, "Yes, of course," on the phone then just blow you off, knowing you won't get caught and not wanting to pay the fees and bother with paperwork. (Also saving you some money in the process.)

twald3• 12 years ago

fully agree on every point

IndianAstronaut• 12 years ago

Hopefully some free trade agreements help eliminate blockages like this in the future.

jwr4• 12 years ago

It's because the market has become incredibly price-driven, especially the consumer electronics market.

This is somewhat similar to what seems to be happening in the mobile app business: there is a race to the bottom and common expectation is that an app won't cost more than a couple of dollars.

jacquesm13• 12 years ago

It's a variation on the premature optimization theme.

They think they will be volume buyers so they outsource the development to the same place that will be doing the manufacturing (China, usually).

But they forget that the design is a very interactive process and that manufacturing is much less so if you just outsource at 'board level'.

twald3• 12 years ago

hey, author here. - the assumption that china is cheaper - the assumption that cost savings trumphs all - not being exposed to what is possible locally - a hype around making something abroad

VLM• 12 years ago

Some of it is small timers trying to make the big time. Something that makes sense economically for me as a hobby would be interpreted as economic suicide for a goal oriented company. Can't run a business like a hobby.

For example, say I order PCBs from China. Takes seemingly forever, but thats OK, I can hang out with family and play minecraft or post on HN. For a hobby that's fine, especially if I save $50. For a company thats economic suicide if you lose 4% of your annual combined salaries waiting for delivery of a prototype. Even financially, dropping your revenue per year might be more expensive than just paying an extra couple percent to the locals.

Another typical smalltimer way of thinking is I make a mistake on a PCB, who cares, its the rare PCB that can't be fixed with some cut-n-solder by hand. That solution doesn't work on a qty 5 figures production run. You'll get much better cooperation with locals, which is irrelevant if your time is free and quantities are single to double digit, but is crucial once you reach consumer kickstarter type scales. Maybe one way to phrase it is problems at the single digit quantity level are interesting anecdotes or minor customer service challenges, but problems at the 10K level are disasters, and problems don't happen at the 10M level because the cost of your onsite overseers stationed in China rounds down to zero per device.

bsder4• 12 years ago

Poor pricing decisions.

Most Kickstarters can't get people to fund "Thingit X" if it costs over $100.

Hell, I'd be hard pressed to put a Beaglebone+wacky I/O thingy+software in a case and shove it out at a profit at $100. And I think I know what I'm doing after a couple decades at this.

And, electronics is NEVER the problem for me. I can generally spin 50 turnkey boards in a week for around $5K unless there is something amazingly exotic about the board. That's just not that expensive relative to business costs.

The things that kill are always the mechanicals. Injection molds are $15K plus for a single mold--and there is always something wrong with the first mold. And you probably need at least 2.

And that's just the case. If you need to mount a display or battery or something that's even more molds.

So, I'm above $50K for injection molds without blinking for even a VERY simple product.

The real solution is to make sure your product is above $100 (preferably significantly) so you can actually 3D print the required plastics (which will be around $10 per part). Now, you can tune your plastic parts and you don't have the NRE of molds. After you have everything tuned and have some volume, THEN you can cut a mold. And, you may never cut a mold--you can print over a thousand parts at $10 per part for $10K. How many Kickstarters ever ship more that a thousand of anything?

CamperBob22• 12 years ago

The real solution is to make sure your product is above $100 (preferably significantly) so you can actually 3D print the required plastics (which will be around $10 per part). Now, you can tune your plastic parts and you don't have the NRE of molds. After you have everything tuned and have some volume, THEN you can cut a mold. And, you may never cut a mold--you can print over a thousand parts at $10 per part for $10K. How many Kickstarters ever ship more that a thousand of anything?

Good points there -- I have a scenario in mind that resembles this example. Do you have a favorite 3D printer for small instrument/device cases? Or do you outsource that work to someone who does?

So, I'm above $50K for injection molds without blinking for even a VERY simple product.

Also, something I've never understood about injection molding is why the hobbyist-accessible CNC revolution of the past 10 years or so hasn't reduced the cost of creating molds. If I do a GIS for "injection molds," it shows me a lot of pictures of things that, although concave, could easily be built by aggregating a small number of machined parts.

rebootthesystem• 12 years ago

The idea that people choose to go to China because it is cheaper is a bit naive. Yes, of course, once you are at scale (not huge, but making thousands of units) China can be cheaper. Why do smart entrepreneurs go to China then?

The ecosystem is there, not here.

If I handed you a bill of materials for a medium complexity product with, say, 250 components and asked you to source them in both the US and China you'd see exactly what I am talking about.

China is now setup with these "manufacturing cities" where everything you might need for a typical consumer product is in close proximity, easy to find and, yes, cost effective. Component manufacturers have huge presence in China in order to facilitate the process. In the US you are exposed to layers of separation and profit-making between you and the component maker. I should also mention that there are components you simply can't get here.

Oh, yes, there's the other reality: Your product is likely to use parts made in China. For the privilege of manufacturing in the US you get to pay the extra cost of shipping, warehousing, handling, supporting and managing the components in a US-based channel of distribution.

Then there's the issue of worker and business culture. Work in China and you'll quickly learn nearly everyone is willing to jump when you say jump. They simply want to get the job done. The US, in sharp contrast, can be surreal at times. For example, it isn't uncommon to send out RFQ's and get no response whatsoever. A couple of years ago I sent out 50 RFQ's to US machine shops for some metal parts. I got around five responses. In China shops would be tripping over each other to get you a quote.

This and other reasons is why it can be comical to hear politicians at all levels repeat the "get manufacturing jobs back" meme. It's ridiculous. This would require a cultural, legislative, labor law and ecosystem shift of such massive scale that it is just about impossible.

No, entrepreneurs don't go to China because it's cheaper. The go there because they need to get their work done efficiently and, yes, at a good price. And all the necessary conditions to meet these goals exist in China, not in Europe and certainly not in the US.

jtoberon4• 12 years ago

In NYC, there's http://www.refactory.co/. I used to work with these guys, and they're great.

jtoberon4• 12 years ago

In NYC, there's http://www.refactory.co/. I used to work with these guys, and they're great.

jtoberon4• 12 years ago

In NYC, there's http://www.refactory.co/. I used to work with these guys, and they're great.

Animats4• 12 years ago

Local manufacturing only works if you're in a place where there's a lot of manufacturing, or your product doesn't really require much manufacturing capability. You many need to be in a place where there's someone down the street with a 20 ton press. If you need a 20 ton press, you need to be in a place where at least three shops have one.

If you're making things which are basically PC boards, manufacturing is not too hard. Making boards and soldering parts onto them has a well developed workflow. There are lots of board houses and board-assembly services. If you design for what a pick and place machine can do easily, things usually go well. Hint: production is surface mount today. This is a pain for people who are used to prototyping with through-hole parts.

Kickstarter-class startups seem to have excessive problems with making cases and panels. Tooling for injection-moulded plastic is difficult and expensive. Once you get it right, the parts just fly out of the machines at a few cents per part. The production process is just getting warmed up on a run of 10,000 parts, and few Kickstarters get there. Basic truth about manufacturing: most of the processes are really cheap if you're making enough items, and far more expensive for short runs.

Animats4• 12 years ago

organsnyder4• 12 years ago

I know some people that started a company that makes GPS receivers for avionic use (any pilot will likely be able to name them). I heard them explain their rationale for manufacturing in China, and IIRC it wasn't related to cost—in fact, they said that cost was comparable to domestic production. Rather, the main advantage was the ability to source components, such as the Apple-specific connectors they have to use. Of course, there are difficulties inherent to working with a manufacturer that's half a world away (miscommunications, timezones, travel, etc.), but they determined that it was still the best way to manufacture their product.

China especially has manufacturing centers where just about any component can be sourced within a few hours, rather than waiting for parts to be shipped from around the country (if not the world).

China has a huge edge in electronics manufacturing, and it's not because of cost (anymore). If we ever hope to compete, we'll likely need to promote such a domestic manufacturing ecosystem via extra-market means.

organsnyder4• 12 years ago

China especially has manufacturing centers where just about any component can be sourced within a few hours, rather than waiting for parts to be shipped from around the country (if not the world).

organsnyder4• 12 years ago

China especially has manufacturing centers where just about any component can be sourced within a few hours, rather than waiting for parts to be shipped from around the country (if not the world).

organsnyder4• 12 years ago

China especially has manufacturing centers where just about any component can be sourced within a few hours, rather than waiting for parts to be shipped from around the country (if not the world).

jtoberon4• 12 years ago

In the NYC area, there's http://www.refactory.co/. I used to work with these guys, and they know their stuff.

They argue in favor of both designing and manufacturing locally. A quote from their blog: "If you kind of just prototype something and bring it to China expecting that then thousands of these things can be made easily without understanding the processes and materiality of manufacturing, that is gonna be a big problem for you. What works is when the design process is iterated alongside the manufacturing process."

sabalaba2• 12 years ago

Those costs in China are too high. I've lived in Shenzhen for under $70 USD / week in a hostel. If you eat out every meal for 100 RMB, you're not even going to be spending $350 a week for meals. While I agree that if you can do it locally, do it locally, but those numbers for the cost of living and travel in China are inaccurate.

hawkice• 12 years ago

For context: 100RMB is about $16, so you better really be enjoying those meals you're eating 3 times a day, because wowzers that's upscale.

sabalaba2• 12 years ago

Exactly, and they were suggesting that it would be $200 USD more than that per week!

tlb• 12 years ago

I agree that manufacturing in-house is great for hardware startups. I've seen it work for several. The insight they gain into the details of design, and the speed they can iterate at, more than make up for higher local labor costs.

twald3• 12 years ago

hey, author here. we're thinking about sharing stories about hardware startups that decided for the local manufacturing route including price differences, manufacturing tips, gm contacts, etc. If somebody is interested or wants to get involved, please send me an email: tobias@senic.com

Gurkenmaster• 12 years ago

I'm not from http://schiit.com/ but they also went with local manufacturing route and their prices are quite competitive.

iandanforth• 12 years ago

I'll add one word of caution, I've looked into getting a product made that had a textile component and a separate product that had a leather component.

Precision, automated stitching is either totally absent or completely unaffordable in the US. There are great shops India and China that can do laser cutting and CNC stitching super cheaply and if you want to make an inexpensive product to tight tolerances this is exactly what you want.

Unfortunately much of the consumer level textile industry has completely left the US. Same with leather. You can find boutique manufacturers, luxury manufacturers, and aerospace type companies, but the sweet spot of high quality and a good price just doesn't exist here. (I actually hope I'm wrong about that but I did a lot of searching before abandoning a couple projects.)

JabavuAdams• 12 years ago

That sounds like a business opportunity.

justizin2• 12 years ago

Read your own comment.

You're basically saying that laser cutting and CNC stitching - operations performed by robots based on files uploaded by computers - are done better in China than here.

That's like someone in China saying that we are better at standing. People on both sides of the ocean probably do just fine at both. ;)

bsder4• 12 years ago

Not done better. They're not done here AT ALL.

That's a big difference.

kcorbitt• 12 years ago

No, in California, it's 8 hours (in the other direction). It doesn't make sense to talk about more than 12 hours of time offset except if you really care about aligning the calendar day instead of just the hour of the day.

nandemo• 12 years ago

Around weekends, it does matter. E.g., when it's Friday afternoon in California, it's already Saturday in East Asia.

kosma• 12 years ago

As usual, the answers are not simple. At our last hardware startup we ended up manufacturing the mechanical parts (injection moulded case, springs, etc.) in China via our industrial design company but did PCBs, assembly and packaging locally in Poland. We simply didn't have enough prior experience to design a foolproof assembly process (which involved flashing, testing on GSM/GPS repeaters, etc.). We are considering moving the to production to China, but only once we solve any critical hardware bugs, smooth out the wrinkles in the flashing/testing process and reach sufficient quantities. With small orders of 100s of units and unexpected disasters like resistors tombstoning due to small errors in solder paste stencils, a five minute call to the manufacturing plant beats cross-timezone, cross-language and cross-culture debugging every single time.

thruflo• 12 years ago

As a founder of https://www.opendesk.cc I think all startups should consider local manufacturing -- when they're fitting out their work space.

</tenuous plug>

terramars• 12 years ago

Totally agree with this. Have a friend who had a successful kickstarter and decided to go with China - he shipped a year late after spending most of his time in Shenzen and going through multiple suppliers. In the interim, they lost the first mover advantage and there are now multiple similar products on the market. If you're not already well established and making a massive amount of something, it's a really bad idea to outsource.

seddona• 12 years ago

On the electronics side we (https://circuithub.com/) have spent a lot of time on automation to bring US manufacturing costs inline with China.

I definitely agree with the premise of the OP, local manufacturing has a lot of benefits.

x0x0• 12 years ago

If you haven't heard of Schiit, it's a fascinating story of a small company that builds high end and low end headphone amps/dacs, for much less money than competitors. In CA.

One of the two founders wrote an online book about it here:

http://www.head-fi.org/t/701900/schiit-happened-the-story-of...

makomk• 12 years ago

There's the minor issue of them not actually testing their designs perform as expected, at least one amp damaging some people's headphones as a result, and them denying the issue existed: http://nwavguy.blogspot.com/2011/07/banned-at-head-fi.html Though that's not really a problem with manufacturing in the US, it's more of a general audiophile industry problem.

shanecleveland2• 12 years ago

What exists to help entrepreneurs find/pair up with manufacturers locally/domestically? Opportunity there?

I work for a US manufacturer (non-tech related), and we frequently get inquiries from folks about making their products. We are primarily focused on producing our own products, but it is nice to fill gaps in production and explore new partnerships. But we don't actively pursue this, and I have no idea how they find us. WOM and random online databases, is my guess.

aslewofmice• 12 years ago

thomasnet.com was decent for finding leads, but we weren't able to find a suitable manufacturer to get past prototype

shanecleveland2• 12 years ago

Interesting. I see that our company is listed in there. That's not voluntary on our part, which may result in a lot of unsuccessful leads.

fest• 12 years ago

I read the story how "Schiit happened" the other day and the last part of chapter 8 also touched this subject: http://www.head-fi.org/t/701900/schiit-happened-the-story-of...

soggypenny• 12 years ago

We (https://supplybetter.com) get asked the China vs. US question all the time and my answer is usually "your mileage may vary". It's a great post by the Flow team, but where to source your manufacturing supply chain is highly dependent on the type of product being built. For instance, the product and vendor certifications required for aerospace, defense, and medical industries are a much larger influencer of where to setup a supply chain than in the consumer hardware space. If you're developing a high-end consumer office product like the Flow team, then it probably makes sense to do the majority of the development domestically. The Bay Area is a great place to prototype hardware, and there's a large fraction of potential beta testers and software talent for them to tap. But like I said, YMMV.

Animats4• 12 years ago

jacquesm13• 12 years ago

20 Ton presses are $200:

http://www.harborfreight.com/20-ton-shop-press-32879.html

Agreed on the injection moulding, that's expensive (and rightly so). But a simple press is not going to be a showstopper on any budget.

If you're going to do sheetmetal manufacturing there are a ton of companies waiting to get your business just about anywhere up to a reasonable volume. Manufacturing hasn't completely moved out (yet).

Small series, prototypes, even your first batch of some product can usually (definitely not always) be manufactured locally in just about any country.

dmritard96• 12 years ago

For some it will make sense. Try iterating on your board designs in CA - I mean like testing your pcb antennas, component swap out etc during development and spend weeks waiting around for you pcbs. Being in shenzhen you can get 1 or 2 day turn around... Even if you don't manufacture there, development is pretty awesome

kweks2• 12 years ago

A lot depends on the product you are manufacturing, and the relationship you have with the manufacturer.

Business in China operates via 'Guanxi' [ http://en.wikipedia.org/wiki/Guanxi ] - which losely translates to a heirachy of: family first, then friends, then people from the same town, then of the same province, then of the same country, and then, the lowly gweilo / white devil.

If you don't have previous contacts or a solid history in China, you fall right to the bottom of the stack - meaning you'll have a bad price, bad negotiation point, low priority in the factory, and ripe for being 'disappointed' with your experience.

Likewise, many people who outsource manufacturing to China hop on alibaba, find a manufacturer with a low per item cost, and think they've cracked East/West trading. Not so. There are many, many hidden gotchyas involved - ranging from child labor, poor conditions, the 'factory' you chose isn't even the manufacturer, to hiden nasties in pricing / shipping, etc.

There is a large misconception that products from China are junk. This is partly true. Some products from China are junk - simply because the Chinese can and will manufacture according to the resale price specified by the buyer - that is to say, you. When you buy a $1 item from WalMart, and you know its price 'should be' $5, you contribute actively to this problem. Want to see a great product made in China? Look at your Apple device.

If you're contemplating doing business or manufacturing in China, there's a few basic things to do to avoid common pitfalls: 1. Visit your factory. Fly over, arrange meetings with 4 - 5 similar factories, and inspect them all. If something seems suspicious, return unannounced to see the reality. This is really, really important. Meeting clients and relations are very, very important in China. 2. Understand / learn how Chinese do business. If you don't have local contacts, consider finding a local broker to do the hard work on your behalf, and negotiate Chinese/Chinese (See Guanxi above). Due diligence here is important. 3. Plan for 12-month development cycles. If you're in a big factory, you're competing with their big clients. Most manufacturers plan in 24-month development cycles, so plan at least in 12 month cycles. This is just common sense. 4. Factor in shipment prices / shipment terms. Learn the difference between EXW / FOB / etc. These make huge diffrences to your bottom line. Remember for production runs to have shipping insurance / liability insurance. 5. Don't fall into legal issues: ensure you know what and how your goods are manufactured. Making toys / figurines? Make sure your factory is certified to make them, or be able to live with the consequences. 6. Be realistic about your MOQ. If you're looking for 5 items, don't look to China - you'll only waste your time and the factory's time.

Like any decision in business, you need to consider what works best for your business.

Source: 30+ years of manufacturing hardware [locks, tools, etc], toys [figurines, plush, etc], and electronics [PCBs, injection moulded cases etc] in China.

CamperBob22• 12 years ago

Good points, and another one worth mentioning: watch out for the case where the single unit or small quantity of sample product you order when evaluating a new supplier turns out to be of much, much better quality than the bulk order you eventually place.

kweks2• 12 years ago

Very good point; typically if you inspect the factories and only work with ISO9001 factories, you can ask to see their random selection / testing procedures that are in place. And, as you say, asking to see the policy is one thing, asking to see the records of the last random test they made is another :D

allworknoplay• 12 years ago

Local manufacturing is the only way to go if you're developing a reasonably complicated product and don't have a team that's super experienced with international manufacturing. I was the technical co-founder of Brightbox (brightboxcharge.com, us founders are no longer affiliated), we were based in NYC and could never have done the prototyping and iteration required if we couldn't clap eyes on hardware constantly.

There's plenty of great manufacturing in the US. Since I'm a software guy, we had one company build us a prototype and handle industrial design (Tomorrow Lab, http://tomorrow-lab.com/; Pepin is a friend) and found an integrated mechanical engineering and manufacturing firm just over the river in NJ (Tech Products, techproductsco.com; Bob is an awesome human being) for the final product and first few real runs.

Having an actual partner we could meet with all the time, understand clearly, and iterate with was incredibly valuable for us. Plus obviously there are important technical integrations (I was writing all the software myself while the ME and EE was happening) and multiple suppliers, and if you're in charge of managing a few bespoke engineers who sometimes don't see eye to eye, you'd better be able to work with them all carefully and personally.

Hardware startups should consider local manufacturing

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