Business Law. The Consequences of Decision to Manufacture in China

Business Law
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Introduction
In the last few decades, most business organizations like clothing manufacturers from have been outsourcing their production from developing countries because of the low cost of production (Morrison, 2013). Before delving into the discussion further, it would be prudent first to understand the meaning of international outsourcing production. Morrison (2013) defines international outsourcing production as the act that entails allocation of the production process that was previously conducted by the organization in its home country, to a subsidiary company in another country. A case in point is the Apple Company from the United States that manufactures their iPhone brands in China to enable it to increase its profit margin over its competitors producing locally.
Based on the background, this essay would, therefore, seek to examine the concerns that are associated with outsourcing or manufacturing production in China where there is cheap labor cost.
Concerns about Manufacturing in China by a Company from the United States
As Cui and Jiang (2012) elucidate, China’s economy is the fastest growing economy in the world with a great potential of creating investment opportunities. As a result, most of the multinationals are looking towards China. Most of the manufacturing companies that manufacture clothes have and are planning to outsource their production to China due to some reasons. Some of these reasons include lower costs of manufacturing, cheap cost of labor, the higher capability of production, and also better opportunities to expand production (Cui & Jiang, 2012).
However, there are some concerns that investors have raised concerning manufacturing or outsourcing production to China. One of the major concerns that manufacturers have raised about investing in China is the possibility of being scammed (Cui & Jiang, 2012). Fear of being scammed is brought about by the language barrier, especially when one is not working closely with manufacturers (Zhou &Xu, 2012). Another point of being scammed arises when the manufacturing facility is situated across an ocean; there are chances of being scammed.
Secondly, there is a concern about the abilities of product duplication. According to Wong (2013), China has high abilities of product duplication as compared to any other country across the world. As a matter of facts, China has superior product duplication capabilities that work faster with accuracy that would exactly resemble the original product than any other place. Ability to copycat other products with high speed and utmost accuracy is what has made China the kingpin of manufacturing. However, duplicated products have a far-reaching effect on the original products regarding revenues because the duplicated products tend to be cheaper, and would fiercely compete with the originally manufactured products (Wang, Niu&Guo, 2013).
Another concern that has been raised in about manufacturing in China is about shipping expenses and time it takes. Resnick (2018) extrapolates that the cost of shipping the manufactured products in a remote city in China, where most manufacturing practice normally take place is quite higher as compared to shipping from a place in the U.S. Therefore, the parent company would have to factor in the shipping cost when pricing the product that might turn out to be quite expensive. The other concern is about the time it takes to ship goods from China that would in many cases take at least 30 days.
The Consequences of Decision to Manufacture in China
When it comes to manufacturing in China, there are some concerns that the company must expect from the decision to outsource production from China. Nonetheless, these consequences are both positive and negative, and as a result, the manufacturing ought to consider all of them before making the ultimate decision.
As Zhou and Xu (2012) point out, the different manufacturing locally in the United States and manufacturing in China is positively significant. This is because by those companies that manufacture locally have to pay for the higher overhead cost, alongside the cost of steep training as well as high turnover. Therefore, by manufacturing in China, the c...