A majority of machine users and investors buying China-made machines are mostly driven by their affordability. Compared to similar products made in other regions, china machines have recently been price competitive hence attracting many buyers. Cheaper labor, scale economies, and availability of raw materials are some of the most known reasons for cheaper Chinese products.
However, there are many other factors that make Chinese products cheaper in the market. For newbies trying to figure out the question of cheaper China-made machines, here are 8 reasons why they are more affordable.
8 Factors Making China Machines Are Often More Affordable:
1. Economies of Scale:
China is greatly enjoying the economies of scale probably more than any other country. The country has everything set for mass production, which has helped to reduce the overall cost of production. A lower mean production cost per item is one of the major benefits of mass production.
It goes without saying that the advanced production systems, impressive infrastructure, and surplus labor are some of the biggest enablers of the Chinese scale economy. The infrastructures enable the efficient flow of raw materials as well as the movement of the produced products.
Therefore, the overall Chinese manufacturing ecosystem is designed to promote the economy of scale. With a massive population and high production volumes, manufacturers can spread their fixed costs over a large number of units, hence reducing the cost per unit.
2. Low Labor Costs:
Wonder why a large number of Western companies have moved their production to China? It’s because of the low labor cost among many other factors. In countries like the US and the UK, the cost of labor is way too high compared to China. This means the overall cost of the machine produced in China is cheaper than the ones made in the US or the UK.
The cheaper labor in China is greatly influenced by the cheaper cost of living and also a large population looking for work. In addition to the large labor pool, the country boasts of having some of the most technical and highly skilled workers. These traits greatly promote efficiency, quality, and mass production.
Therefore, the availability of highly skilled and cheaper labor is one of the reasons machines made in China are cheaper.
3. Excellent Infrastructure Development:
The movement of products, human resource, and raw materials also plays a critical role in determining the cost of production. Poor infrastructure increases the transport cost due to the high inefficiency in the movement of various factors of production. China has solved this problem. In fact, China ranks among economies with sound infrastructure development.
China also boasts of modern infrastructure and this includes state-of-the-art roads, rails, etc. The air transport is also doing pretty well too. With good infrastructure leading to the industrial areas and the market, the overall cost of production is significantly low.
It is important to note the cost of transport within China is pretty low compared to most regions. So, the reduced logistical costs for manufacturers make it more cost-effective to move raw materials and finished products.
4. Government Subsidies and Support:
The involvement of the government in the manufacturing industry is another reason China machines are super affordable. The Chinese government provides various subsidies and support to its industries, including tax incentives, low-interest loans, and favorable policies. This approach has attracted many Chinese manufacturers to join the industry.
It is easy for manufacturers to access government loans at low rates. This may not be the same with most manufacturers in competing regions. The low-interest loans help to lower the cost of production, hence the cheaper end products.
5. Flexible Manufacturing Practices:
Complexity is the reason most machine manufacturers have problems with lowering the production cost. This is not the case with the Chinese machine products. They have been quite creative by eliminating unnecessary production stages as well as improving their production to enhance efficiency.
Flexibility is another factor these manufacturers target the most. In fact, looking at most of the factories, they have some of the most flexible approaches to production. This is why it is very easy to get a custom made machine in China than most regions.
The flexibility and adaptability of the Chinese manufacturers’ production enables them to meet the market demand with ease. It also helps with the issue of overstocking and the big problem of unsold inventory with most manufacturers.
6. Easy Access to Raw Materials:
Another factor that has made Chinese products cheaper is the availability of raw materials. In fact, compared to most of the manufacturing hubs, China could be the only country endowed with raw materials for its industries. The country has abundant access to a wide range of raw materials, including minerals and metals.
Proximity to these resources reduces transportation costs and ensures a stable supply chain for manufacturers. This increases the efficiency of the production and ensures minimal downtime and maximum utilization of other resources, including labor. All these factors lower the cost of end products.
7. Application Of Modern Technological:
China has grown to be one of the most advanced countries in terms of technology. In fact, it might be leading in the modern tech developments. Fast-advancing technology has been heavily adopted in all sectors, including the manufacturing industry.
The major impact of technology is cutting the cost of production, and this has been the case for China machine manufacturers. In fact, there has been a growing number of companies upgrading their production lines with the latest technology. The number of new factories with the latest tech has also been growing fast.
So, the application of the latest technology in the manufacturing industry is a major reason why Chinese machines prices are usually low. With the technology advancing, we can expect Chinese machines to remain competitive in terms of affordability.
8. Global Supply Chain Integration:
China plays a pivotal role in the global supply chain, acting as a manufacturing hub for numerous multinational corporations. This integration allows companies to source components and materials from various suppliers, leveraging cost advantages and creating a highly interconnected production network.
Conclusion
China machines and many other products are cheaper in the market because of tens of factors that make manufacturing in China cheaper. The government supports manufacturers through loan facilities, impressive infrastructure, and so on. So, don’t buy the lies that low quality is the reason for cheaper Chinese machines.
