Barriers when Selecting a Contract Manufacturer in China : A Study of SMEs in the toy industry

Sammanfattning: Production outsourcing to a manufacturer has become a very common thing for small and medium-sized enterprises (SMEs) as a manufacturing choice. Offshore manufacturers provide cheap and skillful labor which is what companies need to make a decent profit and make the products affordable to the end consumer. These manufacturers are called Contract Manufacturers (CM), which is what this thesis is about. However, searching and choosing the right manufacturer can be a challenging process, which can be followed by difficulties and obstacles. This paper explores the process of how these SMEs in the toy industry select and find their contract manufacturer, identify the type of barriers they encountered, the process to overcome and solve those difficulties, and what recommendations SMEs offer to prevent those obstacles for those who want to take the path of dealing with an offshore contract manufacturer. Moreover, personal interviews with SMEs in the toy industries were conducted to investigate the purpose of this thesis. These companies shared their experiences with dealing with contract manufacturers and offered valuable recommendations to overcome those troubles that arise during the selection process of a contract manufacturer. One of the major findings was the communication barrier, which arose when the companies had to outsource their production to manufacturers in China. However, some used a middleman to help with solving this issue and others had a representative that can speak the language.