Companies Diversifying their Supply Chain Outside of China


The events of the past year have given many companies engaged in outsourcing their manufacturing reason to expand their supply chain. COVID-19 showed how vulnerable a single supply chain can be and how hard it can be to relocate production on the fly. Yet, many companies that were forced to look outside of China for facilities and materials have found they could strengthen their positions through diversification.

If you are wondering whether to reduce your dependence on a single producer, in China or elsewhere, it is helpful to explore your range of options. Do you repatriate your manufacturing and absorb the higher costs of production? Or do you migrate operations to another Asian state?

The benefits of keeping your manufacturing presence in Asia are many, such as:

  • Lower cost of skilled labor
  • Lower cost of raw materials
  • Easy access to Chinese suppliers for components and raw materials
  • Easy access to Chinese markets where the burgeoning middles class with ample disposable income is hungry for products from Western brands

For all these reasons, more and more companies are looking to the ASEAN states and particularly Vietnam. Vietnam has many of the advantages Western companies look for in a partner:

  • Stable government that welcomes foreign investment
  • Large, skilled, and literate workforce
  • Burgeoning infrastructure, including new roads and airports
  • New facilities built to contemporary standards
  • Ample raw materials
  • Proximity to China’s supply lines and the Chinese consumer market

There are challenges to finding a new supply chain that can meet your needs to prevent interruptions. Your product line may have unique features, so you want to be sure that whomever you entrust can perform to your standards. Fortunately, Genimex has a fully vetted network of manufacturing facilities, materials suppliers, and shipping services. We have also got a team of on-site project managers ready to educate potential partners on the finer points of custom production.

Lately, we have helped several clients diversify their manufacturing from China to Vietnam, where they have enjoyed benefits of outsourcing. Here are just a few of our success stories:

  • A U.S. company known from innovative DIY tools and workshop accessories wanted to move out of China to avoid tariffs imposed under the U.S. anti-dumping policy. Genimex searched out a capable supplier, worked to develop their knowledge of the client’s products, and aided their supply chain management by sourcing, purchasing, and inspecting components. Because the client’s line was different from the factory’s usual fare, our project managers were instrumental in preparing the facility and the work force to expedite production at the standard the client demanded.
  • A popular brand of kitchen, bath and home organizing products markets under their own name, but also provides private label products for big box stores. Over more than 30 years, they had established their supply chain exclusively in China and now wanted to diversify. Genimex managed the sourcing of various suppliers, including silicon, plastics, and assembly of parts in Vietnam.
  • An innovative company, dedicated to revolutionizing drain protection to eliminate the need for harmful chemicals, provides simple, yet ingenious, products for kitchens and bathrooms. We assisted them is sourcing and validating two subcomponent suppliers in Vietnam. Our team found a final assembly factory and worked with the facility managers to ensure product quality. We had to teach some key processes to help them reach the client’s standards.

Genimex helps clients evaluate their current situation and offers a range of viable solutions in the Asian states where we have our longstanding network. Migration presents challenges, but none are insurmountable, especially when we can assist you in other geographic manufacturing locations.