China is often called the World’s Factory. Yet every factory and every supplier must have a niche, or specialization, to stay in business.
So, what does China “specialize” in? Which product categories are most exported from China to the rest of the world? Any idea?
Don’t worry if you don’t know. That’s why I am here to help you and to share a lot of interesting information with you. The following data is from 2018, and it is quite interesting!
China’s top 10 exports accounted for approximately two-thirds (67.7%) of the overall value of its global shipments.
Which Categories Are Growing the Fastest?
Why is all this important? The simple answer is knowing this can help you with your next big product launch in your country. Knowing this information will also encourage you to start importing products in a new category. Or you may want to change your business direction completely.
Knowing which categories to focus on is just part of the success mix. The second part is to know where those products are produced within China. If you want to know why and how this can help your business, keep reading!
China is super, big and the manufacturing of different types of products and industries is quite spread out. The government is actively supporting, establishing and growing targeted industrial zones all over the country—strategically advantageous both for suppliers and buyers.
Please note these are not official zones with tax incentives: but industrial clusters. The city of Detroit in Michigan USA, for example, is famous for car manufacturing. Imagine all the US car manufacturers being located in the state of Michigan rather than being spread across the US. They would be concentrated in one specific location. This would be called a manufacturing cluster. Those businesses in the cluster would benefit from the collective growth, R&D, new jobs, lower cost of resources (located near to them) among other things.
Clusters in China are similar and have certain product categories producing in one geographic location that provides specific resources.
Another requirement for the clusters is a suitable labor pool. Additionally, most of the clusters are located near large shipping ports, and that makes exporting products more efficient.
So, this list of factors provides the competitive advantage for those industrial zones. But how will this benefit you, the client? You will get lower prices for better quality products at decreased production times and with faster delivery. Truth be told there are more advantages, like complementary products, R&D possibilities but that is for more long-term cooperation.
So, it does matter where you source in China, and everything depends on the product that you are trying to produce. I have already mentioned several advantages that you can capitalize upon, but there are more. The choice of potential suppliers is the most profound one, as the more suppliers there are, the more choice you have and the lower the prices you can negotiate.
When you look at industrial clusters in China you can see that specialization is set up province by province. It will not be just one product, but a category of products that have the same basis or components or production methods.
The reason for that is simple, China not only imports natural and other resources for manufacturing purposes, but it also uses its own resources. For example, if you want to produce electronic goods you need to go to Guangdong province, the city of Shenzhen, because government policies and incentives prompted the production of this particular category in the 1990s.
Here is a list that may help you find the regions where the industry clusters can be found:
Below is a map of China manufacturing distribution and where the different industries manufacture their products in the various provinces throughout China.
Sources from Ministry of Commerce, PRC
The best place in the world to buy a German Shepherd dog would be in Germany where the breed originated. The same principle goes for your products.
If you want to produce bamboo spoons, you would not go to a supplier of plastic chairs, or to an agent that specializes in woolen socks. Everyone is good at something, and that specifically applies to Chinese manufacturers and agents.
If you are working with a factory that makes and supplies shoes and it is located in a province that has a “shoe cluster”, you are in good hands. If you are working through an agent or a sourcing company that is “into” shoes, you will have more advantages.
Remember China focuses on Guan Xi (personalized relationship network). Neighboring factories will help each other when necessary. When it is a peak season, or if machinery breaks down, for example, they will share resources, workers and materials to make sure orders are still delivered.
When sourcing from China you need to make sure you are sourcing with, and from the right, people. I don’t mean the ones who will not rip you off. You need support from those who can spend time to make sure you are working with the right cluster. It will help you increase your products quality and decrease prices.
A quick review will allow you to have confidence in the millions you can make on the products you have sourced from China:
These are the basics you need to know regarding provinces and products to stay on top of your game. There are other things of course, and I know I can help you get through the maze of different issues involved in sourcing from China.