There are lots of situations in which a company might outsource production to a contract manufacturer in a country like China. An existing manufacturer might find it can save costs by outsourcing, or it might need the skills of a specialist company. Otherwise, a new business venture might be launched with an outsourced product.

There are also many ways a company can benefit from using a contract manufacturer. Hiring a company with domain expertise, specialist equipment and trained staff can result in higher quality levels. Costs can also be reduced with cheaper, overseas suppliers. Using a contract manufacturer also gives more future flexibility because production can be upscaled and downscaled more easily.

On top of all this, not having to handle production also means the hiring company can focus on more beneficial areas of business, like marketing or innovation.  

In 2024, China is still the biggest manufacturing country in the world by far. The low costs, well developed supply chain, wide range of manufacturing capabilities and high production qualities mean that China is still on top.

Almost any company looking to hire a contract manufacturer will be able to find what it needs in China.

• China is still the world’s biggest manufacturing hub, and it’s a top choice in most product categories.
• Chinese manufacturers have a high level of reliability, scalability and affordability.
• The support for lower volumes and lower set-up costs is crucial for SMEs and start-ups.
• It’s important to fully understand what your product and contractual needs are before you start
• searching for a contract manufacturer in China.
• You should compare multiple manufacturers and make your choice very carefully.

• Introduction
• Key Takeaways
• Why Use China for Contract Manufacturing in 2025?
• Factors to Consider Before Outsourcing Production to China
• Preparatory Work Before Reaching Out to Manufacturers
• What Types of Contract Manufacturers are There in China?
• How to Find a Contract Manufacturer in China
• China’s Inner Geography
• How to Choose the Right Chinese Manufacturer
• Summary
• Komaspec

China is still the world’s leading manufacturing country in 2025. The country manufactures everything from textiles to automobiles to the latest mobile phones, and everything in between. China has a large and affordable workforce, with a population of 1.4 billion people. According to data from the World Bank, it also has a share of around 30% of global manufacturing output. This compares to the next biggest manufacturer, the USA, which has a share of around 15%.

The reasons for China’s popularity are:

• Cost-effectiveness – labor and production costs are still lower than Western alternatives.
• High flexibility – manufacturers support both small and large volumes. The high availability of suppliers also allows for easy scaling of production.
• Advanced infrastructure – the supply chain and physical infrastructure industry relies on are dependable and well developed. Having hundreds of sub-suppliers making and stocking every kind of conceivable component makes for rapid and cost-effective manufacturing of custom products, for example. Ports are also excellent, and there are well-developed road and railway networks.
• Wide range of manufacturing capabilities – Chinese manufacturers produce an incredibly wide range of goods. Skilled labor and management staff, such as tooling engineers, welders or product designers, are widely available. There’s a very deep well of practical experience and technical know-how in virtually all fields and applications.

The combination of skill, cost-effectiveness, reliability and scalability is what sets China apart. Other countries have increased manufacturing output in recent years, but China is still the world’s leading manufacturer.

Although China is a contract manufacturing destination with wide appeal, it’s still wise to consider how manufacturing in China will work for you. Different production orders will be affected differently by certain variables, and it’s important to weigh up how you will be affected.

The most important things to think about before you embark on a contract manufacturing journey in China are:

Costs

Price estimates given up front might not reflect all the eventual costs you will pay. There can be hidden costs associated with quality control inspections or regulatory compliance, for example. Otherwise, you might encounter other unforeseen costs. For example, if you need to travel to and from your supplier or hire an interpreter this could add to costs.  

Tariffs

You may have to pay international trade tariffs that will affect the ultimate price.

Transportation

You will need to pay for the transportation of your goods from China to your country. The cost of this will depend on what the goods are, the speed at which you need them delivered and whether or not you have any special requirements.

Lead Times

You will need to account for the lead time between placing your production order and your supplier starting work.

Intellectual Property Rights

Protecting your intellectual property rights can be difficult in China. There is a risk of product designs and other intellectual property being copied. If this is important to you, you will need to take appropriate steps. This will add to time and give you another hidden cost.

If you do decide that China is the best place for your outsourcing venture, you should take care of a few things before you reach out to manufacturers.

Legal Considerations

You should make sure you know what legal considerations you will need to cover in your agreement with your manufacturer. Some things to consider are

• Intellectual property protection
• Non-disclosure agreements
• Compliance with corporate social responsibility legislation and standards
• Product warranty and liability

Product Design, Prototyping and Testing

You can take care of product design, prototyping and testing either before you contact a manufacturer or with them if they offer this service.

If you do not work with your manufacturer on design, prototyping and testing, you will need to carry this out in-house or consult a designer. Manufacturers that provide design for manufacturability (DFM) feedback and prototyping services are very convenient and cost-effective. You will, however, need to complete partial designs before they are able to assist.

Contract Considerations

You should consider what things you need to cover in your contractual agreement with your manufacturer.

It’s important to give all necessary specific information about:

• Product specifications
• Services provided
• Materials
• Packaging
• Quality control procedures
• Contract termination
• Dispute resolution

After you’re fully prepared, you can begin to search for a manufacturing partner.

There are three basic manufacturing models that contract manufacturers work to. The terminology can be confusing for newcomers, but it’s good to make sure you understand how each type works before you start searching for a manufacturer.

Original Design Manufacturer (ODM)

Original design manufacturers are manufacturers that own the designs for products that they make. You do not need to have your own designs with an ODM. You contract them to produce a product that they regularly produce and that they own the designs for. You will only be able to tweak and slightly contribute to the design.

Original Equipment Manufacturer (OEM)

Original equipment manufacturers are experienced in the product category they manufacture in, and they have the staff, equipment and production facilities ready to manufacture a particular type of product. This could be kitchen utensils, for example. You will, however, make your own designs and then approach the manufacturer to create a product according to those designs.

Contract Manufacturer (CM)

Contract manufacturers that are referred to as just “contract manufacturers” provide more general services. They usually have experience in several product categories. You can approach a contract manufacturer with your own designs in any product category they accommodate, and they will be able to manufacture based on those designs. 

Find out more about choosing between ODM, OEMs.

Table 1: A comparison of ODM, OEM, and CM manufacturing models

Here are some of the places you can look to find a contract manufacturer:

• Online platforms – You can look on platforms like Alibaba, Global Sources and Made-in-China.
  • Alibaba – com is a sourcing platform that connects buyers to manufacturers, suppliers and exporters, predominantly in China and other parts of Asia. The vast majority of Alibaba products are white label products, and there is limited interaction with the manufacturer.
  • Global Sources – Global Sources operates in a similar way to Alibaba, but the providers aim to vet the reliability of suppliers more carefully.
  • Made in China – Made in China is a platform connecting buyers to manufacturers, suppliers and exporters in China. Manufacturers on the Made in China platform offer custom manufacturing services as well as white label products.

• Trade shows and expos – Visiting can be expensive and logistically difficult, but trade shows and expos like the Canton Fair are a good place to look. Find out about upcoming trade fairs.
  • Canton Fair – Held twice a year in Guangzhou (Canton), The Canton Fair, is the largest and most comprehensive trade fair in China. It is officially known as the China Import and Export Fair. You can go to the Canton Fair to meet any of the 25,000 manufacturing exhibitors that attend every time to showcase for virtually every type of production.
  • Yiwu International Commodities Fair – Held since 1995, the Yiwu Commodities Fair is a major export oriented Chinese trade fair. The fair focuses on consumer goods, such as textiles and electronic gadgets, and is particularly popular among small and medium-sized businesses.
  • The East China Fair – The East China Fair mainly focuses on textiles, garments, and home goods but is known for attracting manufacturers and buyers from a range of categories. The fair is held once a year in Shanghai.
  • Sourcing agents – Sourcing agents have contacts, and they understand the language. They can be very helpful in finding and vetting manufacturers, although it’s not always easy to find a completely trustworthy one.

• Recommendations and referrals – You can ask in your network for recommendations. Your selection might be limited, but it’s worth a try.

Outside of this, the thing to do is to conduct your own online searches, speak to factories and visit them if necessary. One benefit of this approach is that you will establish a direct relationship with your supplier.

It’s helpful to know that manufacturers in China tend to cluster in certain areas by industry, with subsidiary raw material and component suppliers existing in close proximity to the final assembly plants.

Here are some Chinese industry clusters:

• Home appliances: Pearl River delta area (Zhongshan, Shunde, Foshan) and Zhejiang.
• Electronics: Shenzhen and Dongguan.
• Optoelectronic suppliers and PCBA manufacturers: Jiangsu (especially Kunshan).
• Metal manufacturing: Generally concentrated in the north of China (Shandong and Hebei), although lighter metal processing is heavily concentrated in the coastal provinces.
• Watches: The Greater Shenzhen area, with a certain percentage in Dongguan.
• Automobiles: Jilin, Hubei, Shanghai, Guangzhou and the Yangtze River delta.
• Motor and bicycle sector: Taizhou city in Zhejiang leading the motor and bicycle sector.

Pretty much no matter the industry, there is an industrial cluster (or two, or three) in China dedicated to its production.

Fig. 4: Industrial Clusters in China

After you’ve shortlisted potential manufacturing partners, you need to choose the best one. This is an important decision. There’s also a lot to discuss, and we’ve written a more complete article on the subject here.  

The important things to think about are:

• Reputation and reliability: Research your manufacturer’s history and client feedback to see if they really can deliver what they promise.
• Manufacturing capabilities: Make sure your manufacturer has the right staff, equipment and expertise for your product. An experienced, capable manufacturer will produce far better quality products with much more reliability than an inexperienced one. Expertise is particularly important for complicated products or products that need to meet regulatory criteria.
• Communication: Make sure it’s possible to bridge language and cultural differences. Not only are communication problems difficult to deal with, but they can result in mistakes.

• Quality control: Ensure the manufacturer can meet your quality standards.
• Logistics and supply chain management: Some hiring companies will need to have visibility into the supply chain and some control over it. Others may need to hire a supplier that can provide post-production logistics support, such as delivery.
• Production capacity scalability: Make sure your supplier can meet your initial demands requirements and then scale production in future, if needed.
• Trustworthiness – Choose a supplier you can trust with your intellectual property.
• Design for manufacturability (DFM) feedback – If you need assistance finalizing your designs and making sure that they are optimized for manufacturability, you should hire a manufacturer that provides design for manufacturability (DFM) services.

Here’s an example of a qualitative analysis of potential contract manufacturers:

Table 2: Qualitative Analysis of Potential Contract Manufacturers

China is still the world’s leading manufacturing country by a long margin. China’s manufacturing network is very well developed, and Chinese manufacturers reliably produce high-quality products at low cost. Other regions of the globe do also offer good manufacturing services, but China is still the go-to for a huge range of products.

If your production requirements are suited to China, do not rush in too quickly.

Make sure you:

• Prepare yourself before you start searching for a manufacturer. Make sure you know exactly what products, parts or components you need and how you want your manufacturing relationship to pan out.
• Understand how different manufacturers operate.
• Shortlist multiple potential candidates and perform a detailed analysis to arrive at the best fit for you.

Komaspec is a Canadian-owned contract manufacturer based in Guangzhou, China.

Komaspec is a turnkey manufacturer, supporting startups and SMEs. We specialize in taking product designs from the prototype phase through to mass production, with extensive engineering and design capabilities for debugging and solving tough application and technical issues. With deep experience in agritech, mining, commercial appliances, bike peripherals and many other products and components, Komaspec knows how to make production work.

We’re always available to discuss a product proposal or design and to provide design assistance and free consultation on contract manufacturing in China.