Increasing costs from China and 25% import customs duties to the US are driving outsourced manufacturing costs to an unsustainable level. US manufacturing is no longer realistic due to US labour rates. Action was essential as the market has changed rapidly and our client faces serious profit pressure as cost increases cannot simply be passed on to the consumer.
Seek a new lower-cost manufacturing country without losing quality and flexibility.
Vietnam has become one of the major manufacturing hubs in Asia, supplying home furniture as well as professional furniture to export markets. Buyers are outsourcing their own models or securing the latest OEM collections.
Vietnam has several thousand furniture factories in three geographical clusters, in and around Hanoi in the north, Danang and surroundings in the centre and the largest, Ho Chi Minh City and surroundings in the south.
Following our proposal, our client requested Asian Insiders/FinnSEA Nordesk OU to find qualified furniture factories. Together we created a list of requested supplier qualities and competencies and the ideal profile of their factory.
That profile was applied against a range of furniture factories to determine a shortlist of ten suitable companies.
At this point, to save time and for the first supplier, we agreed that the search would focus on the southern region. We then visited each of these companies to interview and benchmark them in various points such as machinery, size, export experience, quality, sustainability etc. We showed them our product drawings to verify their capability to manufacture these products.
After reporting our processes and finding to our client we jointly selected the six most attractive factories to visit. We arranged the visit program and for three days alongside our client, we met again with the companies for further evaluation, discussions and analysis. Our client presented product samples and prices were negotiated.
After these meetings, our client selected two companies to continue with. Samples were manufactured, accepted and pilot production commenced. By using our Partner Search service our client avoided having to spend 6-12 months visiting exhibitions or working with randomly selected companies.