Today’s global economy offers more opportunities than ever to small businesses. But for U.S. manufacturers specifically, it also has led to more competition than ever.
Offshore manufacturers, particularly those in China, have been able to produce products at a fraction of the cost that those same products require in the U.S. In fact, about 5 million U.S. manufacturing jobs were offshored between 2001 and 2011, with a third of those going to China. That shift has slowed in recent years, but U.S. manufacturers still face higher labor and operations costs and other challenges due to offshore competition.
How to Compete Against Offshore Manufacturers
But this doesn’t mean your manufacturing business can’t compete on a global level. Here are some tips on how to compete agaist offshore manufacturers, even as a small business.
Don’t Try to Compete on Price
Customers love a great deal. But the fact of the matter is that you simply can’t compete with manufacturers from China and select other countries when it comes to price. So don’t cut yourself short by attempting to play that game.
Andrew Clarke, founder and president of consulting firm Ground Floor Partners said in an email interview with Small Business Trends, “Many foreign countries have much looser standards when it comes to labor and the environment. When you have to pay unskilled or semi-skilled workers $12 an hour plus insurance, taxes and some benefits here, but a competitor can pay $3.00 per hour (or less) in another country, it is hard to compete.”
Label Products as “Made in America”
If you sell to customers in the U.S., make sure they know your products are made domestically. Plenty of consumers will be willing to pay extra in those cases due to pride and perceptions about quality.
Clarke says, “That carries a lot of weight in the United States. The key is to back up the claim with reality. Some companies manufacture everything overseas and then assemble the components in the United States, but claim they are made in America. That is not being totally honest.”
Focus on Quality
Customers are also often willing to pay a bit more for products that are made with quality parts or ingredients. So be specific in your labeling and marketing materials about exactly what it is that sets your products apart from the competition.
Clarke says, “The domestic end product might look exactly the same as the foreign product, but the components, materials and processing are probably held to higher standards in the US. For example, no melamine in the food. No insecticides in the produce. Etc”
Certifications like those from the USDA, EPA and CPSC are made to indicate specific levels of quality, testing and performance. Customers tend to trust these third parties more than your own marketing claims. So it can offer some extra weight behind your own quality claims.
Clarke adds, “Do you have a LEED certified facility? Is your final product USDA certified organic? Certifications give people confidence about quality, care and safety.”
Connect with the Community
“Buy local” has become a popular sentiment that can stretch beyond the corner store or farmers market. In the area where your business operates, you can get involved with charitable groups or civic organizations, sponsor local initiatives, or simply provide an open and active presence in the community. This can help you appeal to those in your own backyard as well as others throughout the country who look to do business with socially conscious companies.
Clarke says, “Emphasize how well you treat your workers and what you do for the local community. For example, give real or virtual tours of your manufacturing facilities to show people how clean and safe the work environment is. Sponsor local park cleanups. Sponsor events at local non-profit fundraisers.”
Focus on Service
Another way you can set your business apart is by creating a great customer experience. If you can’t compete with others on price, then you need to give customers a reason to pay extra in order to buy your products. Quality is one major standout, but service is another. So focus on creating a really exceptional experience that will keep customers coming back again and again.
Clarke says, “Emphasize customer service, transparency, reliability, delivery times, or time between initial order and final product delivery.”