Out Sourcing Prototype Production Internationally


Out Sourcing Internationally

Arguably (and ironically), the biggest pros of having your prototype produced over seas (where the origin is US) is the price. You can’t beat it (well you actually can – sort of).  What will beat you though, is saying hello to IP risk. Let’s begin our discussion with China, the number one spot in the world to produce consumer electronics among other things. Its remarkable how far China’s economy grew (exploded — Shenzhen’s GDP grew by 40% annually from 1981 to 1993),  and is now second only to US in terms of world market size shares (beating Japan in ’05).

If you haven’t read the prequel, we suggest you do so here.

Currently however, the growth rate has slowed down since its no longer cheaper to manufacture there (as an example, see how much it costs to live there — p.s. its more than NY and SF).  That little history tid-bit is necessary to understand why IP infringement is a real thing in China. In fact, its estimated that for the US alone, $600 Billion is lost every year. And it doesn’t matter if your design is open source (meaning you more or less have given it away, and let others better the original design) or if its closed.

Here are two examples of each:

  • Open source
    • We’re all familiar with the raspberry pi (if not, please do your self a favor and see what that little machine can do AND why it was developed). In China, we have the banana pi (even the name is a clone).
  • Closed source
    • Cisco is battling Huawei (a world class Chinese brand) for stealing their tech.

This might not be an issue for you (as in its open source), but when you consider your work valuable and if you want to take it to market (as in if its closed source), its incredibly important to protect your work as much as possible (i.e. that’s why patents exist).

Going strong

Let’s assume that what was said above is okay and price is king. Here’s the statistical outcome after sending out a job. You wait about a month to receive your prototype. Let’s be more specific, your first prototype.  Its been a month since you’ve placed your order, and now another month has been added to your time line (believe us, this will happen whether you call it Murphy’s law or an error). Stage two is to see where the blame should be put, if your an experienced engineer its likely that its not you, in which case its the Chinese manufacturer in which case you recall that you didn’t take Mandarin as an elective because you thought that Spanish will be more useful (both are useful of course — just one might be a little more now).  Fine, maybe you already know Mandarin, but to communicate with the manufacturer whom are located in China, you must become a night owl (or wait 11 hours for them to respond to your email — timezones). Your skills pay off, and you learn that it was an accidental manufacturing error. By the time you’ve read that email, you can cry your self to sleep (these are true stories — ehm mine ).