Printed Napkins from Asia: Is the “Lower Price” Really Worth It?
“Made in America.”
Most people support the sentiment. Yet despite the push to support American manufacturing, the truth remains: goods produced in China are usually cheaper to buy and sell. And people vote with their wallets.
But ultimately, is it really worth it? Does the lower cost of goods produced in China offset the drawbacks?
We will explore some well-known and lesser known consequences of the “Made in China” phenomenon.
Pollution emitting from rural manufacturing plant
First, China is the world’s largest producer of greenhouse gases. Goods manufactured in China emit more CO2 per dollar than equivalent goods manufactured elsewhere.
Second, China remains coal dependent. Despite national regulations to curb emissions and increase air quality, the regulations remain unenforced locally. As such, emissions and pollutants vary wildly between different manufacturing plants and different providences. Research suggests that up to 70% of northern Chinese companies violate federal pollution regulations.
Additionally, analysts predict that Chinese coal use will not decrease. At best, current predictions keep Chinese coal use at the same levels through 2040.
At present, Chinese manufacturing remains environmentally unsustainable. Overall, American manufacturing standards are more comprehensive, better enforced, and more consistent across geographical areas (clm.com). And while American emissions standards are arguably lenient, China surpassed the United States in total annual CO2 emissions in 2006, China has remained the world leader since.
Shipping and Pricing Concerns
Goods manufactured in China may incur unexpected delays, taxes, and fees. These concerns are especially problematic for customized products with no back inventory.
1. Manufacturing Delays
Chinese holidays, especially National Holiday (one week in October) and Chinese New Year (approximately one month in January or February), result in widespread factory closures. Without forethought, Chinese holidays spell disaster to foreign companies. Factories shut down completely. New orders are not accepted and production of existing orders ceases.
Factory closings around the Chinese New Year are especially burdensome. After a one-month hiatus, struggling factories often shut down. Unhappy workers quit their jobs. And even the most prosperous factories do not resume full productivity until March at best.
For example, for Chinese New Year 2017, factories closed as early as January 2nd, 2017 and did not reopen until as late as February 13th, 2017 (theodmgroup.com).
For the American consumer, goods will be delayed.. For foodservice and hospitality orders, the customer risks not receiving their products for the spring rush, or by the start of tourist season. And for customized products with no existing inventory, business can stop completely.
2. Shipping delays
Bad weather at sea frequently delays shipping vessels. Cargo ships may be held up at port, delaying the start-off date. At sea, bad weather affects the speed of travel and the number of stops along the way. Often ships must make sudden route changes, adding delays to the trip.
Even with ideal circumstances, shipping across seas remains inconsistent. A study by Drewry Maritime Research found that even with no additional stops, container ships arrive at port on schedule only 64% of the time. The most punctual shipping company had an on-time rate of only 80%.
Again, for the consumer with no back inventory, such delays spell disaster. Shipping domestically involves less paperwork and fewer checkpoints. And delays on land due to bad weather are less common and substantially less significant.
3. Unexpected Manufacturing Fees
Chinese manufacturers require higher order minimums. Storage space and costs make this prohibitive to some consumers.
Additionally, while labor is cheaper, other manufacturing costs may be higher. The cost of electricity in China is 2-3x higher than in the USA. Natural and process gasses (such as nitrogen and hydrogen) also cost more.
Legal issues, especially intellectual property protection and enforcement, also present hidden costs. IP protection in China is a costly, high-risk proposition. Without a solid Chinese patent lawyer, one risks patent infringement.
Last, building projects in China often incur unexpected costs. Filled marshland, the most available land in China, is unstable and requires expensive reinforcements prior to construction. Additionally, the Chinese government requires you hire multiple consultants before undertaking any building project.
While most of these costs primarily affect the manufacturer, the consumer should be aware. The customer usually absorbs the increased costs.
4. Shipping fees
Duties, tariffs, and taxes increase the shipping costs for Chinese-manufactured goods. For instance, US imports from China are subject to customs duties, Merchandise Processing Fees (MPFs), and Harbor Maintenance Fees (HMFs). These fees are calculated last, taking into account the combined product cost, transportation cost, and export clearance costs.
Additionally, the American company often pays for transit from the manufacturing plant to the Chinese Port of Loading, and for clearance documentation, although terms vary based on contract specifics (chinaimportal.com). Costs normally absorbed by the manufacturer in a domestic partnership are passed along to the consumer in a Chinese business partnership.
In total, shipping internationally involves an assortment of unexpected fees. The consumer absorbs the increased prices.
Cultural differences and regulatory discrepancies between the United States and China affect manufacturing output. Chinese products may not meet American safety and quality standards.
1. Communication problems
First, the language disparity may prove problematic. Without both parties speaking the same language, critical details regarding design, manufacturing, or shipping may be lost in translation. A competent translator is necessary, but imperfect. The manufacturer may still produce an imperfect product due to communication issues.
Second, cultural business differences affect business partnerships. American and Chinese workers perceive politeness differently. For instance, small linguistic choices, like answering with a simple “no,” may be viewed as impolite.
Miscommunication is likely. Without proper cultural training, the chance for misstep is high. Ultimately, the business relationship suffers.
Societal faux pas prove detrimental to manufacturing partnerships. Chinese businesspeople rely heavily on guanxiwang, or networking, for business dealings. Unlike in America, where future partners will negotiate contracts and other business dealings immediately, the Chinese require strong personal relationships before entering business deals. Cultural missteps hamper the process, and delay manufacturing output.
2. Safety concerns
Last, goods manufactured in China vary in quality. Chinese regulations differ from American regulations, and Chinese-manufactured goods may not meet American quality standards. At worst, they present a hazard to human health.
Chinese food products have been linked to serious human health issues. Food products, including infant formula, pet food, and tainted meat and water, have caused serious illness and deaths. Poor regulatory standards have resulted in food unfit for human consumption sold direct to consumers.
The tissue and inks used in American napkin manufacturing are certified by the USDA. China has no proper, consistent regulatory framework. Can we safely assume that Chinese napkins meet our same safety standards?
Safety standards in China are limited and variable. China has no equivalent to the Occupational Safety and Health Administration (OSHA). Workers remain vulnerable to workplace injury or death. Poor record keeping, faulty licensing, and ignored safety regulations in part caused the 2015 Tianjin explosions, killing 173 people and injuring over 800 more.
Large multinational companies, including Samsung and Apple, have been accused of labor violations in China. Both allegedly used underage, underpaid labor workers in various manufacturing plants throughout China. While both companies deny knowledge of wrongdoing, neither incident is isolated. In 2015, the nonprofit advocacy group China Labor Watch uncovered rampant worker abuse at multiple toy factories across China. Workers toil long hours under cruel bosses, with inadequate, unguaranteed pay, poor safety regulations, and limited training. Workers are often underage. Death rates from preventable accidents and suicide remain high (chinalaborwatch.org).
In contrast, OSHA protects American workers from hazardous workplace conditions. Unlike Chinese workers, American workers are protected from retaliation if they speak up about hazardous working conditions. OSHA ensures all Americans have access to proper safety training and protection gear, and that the workplace is free from known and unknown safety hazards.
Overall, China lacks the regulatory framework implicit to American manufacturing. Qualities we take for granted in America, such as fair working conditions and safe, quality products, are lacking. And environmental standards remain mediocre at best.
Simultaneously, business and cultural differences inhibit manufacturing processes. Government, construction, and shipping fees aggravate your quoted price.
Ultimately, Chinese manufacturing is inconsistent and questionable. The American manufacturer controls very little and the end result remains uncertain.
But the perception remains: labor costs are lower in China. Or are they? New studies suggest that Chinese manufacturing only saves 4% of total labor costs. And as the value of the Chinese yuan strengthens, the gap between American and Chinese labor costs decreases. Outsourcing to China no longer guarantees substantial labor savings, or a cheaper product.
So, with no strong benefit to buying from China, why risk it? American manufacturing is effective, predictable, ethical, and safe. And options for American-manufactured tableware are numerous.
“Made in America” has never been so easy.