International Outsourcing-4 Tips for Companies

• Ask yourself: Why did you think this would be easy?
This may sound psychological, but is a fair question to ask. If making lounge chairs is difficult in Cincinnati, why would someone think it’s easy, say, in Malaysia? The language, culture, currencies and laws are different. It’s also thousands of miles away. Managing factory workers is tough in any foreign country and much more difficult in unknown countries.

• Protect your home base.
If you’re worried about your Malaysian factory selling your designed chairs to your U.S. retailers, then you’ve picked outsourcing as a solution without first solving some key branding, positioning and customer-service needs. Market power at home is your best protection against a less-expensive product.

• Live there for a while.
If you are really considering making your lounge chairs in Malaysia, you should invest the time and live in country for a while. Get to know the rhythm, communication styles and your factory.

• Don’t use a one-country approach.
Tying political and currency risk to one international supplier is a bad idea. There would be less hoopla about China’s currency valuation if firms had a better production mix with several other countries. The tsunami in Japan demonstrated that there was only one supplier for some of the parts used in the automobile industry. Hence, car companies couldn’t complete their orders.

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