A lot depends on the product you are manufacturing, and the relationship you have with the manufacturer.<p>Business in China operates via 'Guanxi' [ <a href="http://en.wikipedia.org/wiki/Guanxi" rel="nofollow">http://en.wikipedia.org/wiki/Guanxi</a> ] - which losely translates to a heirachy of: family first, then friends, then people from the same town, then of the same province, then of the same country, and then, the lowly gweilo / white devil.<p>If you don't have previous contacts or a solid history in China, you fall right to the bottom of the stack - meaning you'll have a bad price, bad negotiation point, low priority in the factory, and ripe for being 'disappointed' with your experience.<p>Likewise, many people who outsource manufacturing to China hop on alibaba, find a manufacturer with a low per item cost, and think they've cracked East/West trading. Not so. There are many, many hidden gotchyas involved - ranging from child labor, poor conditions, the 'factory' you chose isn't even the manufacturer, to hiden nasties in pricing / shipping, etc.<p>There is a large misconception that products from China are junk. This is partly true. Some products from China are junk - simply because the Chinese can and will manufacture according to the resale price specified by the buyer - that is to say, you.
When you buy a $1 item from WalMart, and you know its price 'should be' $5, you contribute actively to this problem. Want to see a great product made in China? Look at your Apple device.<p>If you're contemplating doing business or manufacturing in China, there's a few basic things to do to avoid common pitfalls:
1. Visit your factory. Fly over, arrange meetings with 4 - 5 similar factories, and inspect them all. If something seems suspicious, return unannounced to see the reality. This is really, really important. Meeting clients and relations are very, very important in China.
2. Understand / learn how Chinese do business. If you don't have local contacts, consider finding a local broker to do the hard work on your behalf, and negotiate Chinese/Chinese (See Guanxi above). Due diligence here is important.
3. Plan for 12-month development cycles. If you're in a big factory, you're competing with their big clients. Most manufacturers plan in 24-month development cycles, so plan at least in 12 month cycles. This is just common sense.
4. Factor in shipment prices / shipment terms. Learn the difference between EXW / FOB / etc. These make huge diffrences to your bottom line. Remember for production runs to have shipping insurance / liability insurance.
5. Don't fall into legal issues: ensure you know what and how your goods are manufactured. Making toys / figurines? Make sure your factory is certified to make them, or be able to live with the consequences.
6. Be realistic about your MOQ. If you're looking for 5 items, don't look to China - you'll only waste your time and the factory's time.<p>Like any decision in business, you need to consider what works best for your business.<p>Source: 30+ years of manufacturing hardware [locks, tools, etc], toys [figurines, plush, etc], and electronics [PCBs, injection moulded cases etc] in China.