Dangers of Prototyping Electronic Products Overseas

It’s no secret that China is a manufacturing giant. In fact, over 28 percent of the world’s manufacturing happens in China. It leads all other countries in global manufacturing output and has almost double the output of the US, which comes in second place.

This, in large part, is due to the cheaper cost of manufacturing overseas, specifically in China, and the availability of manufacturers willing to contract with companies and individuals large and small—being especially true of electronic products.

While many US companies outsource prototyping and manufacturing to China quite successfully, it isn’t without its risks to a company’s intellectual property (IP), especially if you’re not familiar with the procedures and pitfalls. In this article, we’ll cover the dangers of prototyping electronic products overseas when it comes to the safety of your IP, so you can make informed decisions about the future of your business and its products.

Intellectual Property (IP) Risks

Intellectual property is one of, if not the most important assets to a company. In the wrong hands, it can cause major disruption to a business and its profitability. Unfortunately, China and other overseas countries are known to have weaker, harder-to-enforce intellectual property laws when compared to other countries.

Larger companies like Tesla or Motorola have the ability to file lawsuits and escalate their IP theft concerns into international issues, but smaller businesses don’t have much of a voice when it comes to IP theft. Dozens of small businesses share similar stories of being unable to stop manufacturers from creating knockoffs of their products. This is an issue even without providing overseas manufacturers with your design files and other product specifications for manufacturing.

If you don’t have any intellectual property yet, it may stay that way if you decide to work with Chinese and other overseas manufacturers. Without going into great detail, many Chinese manufacturers who help create a prototype of your electronic device will retain ownership of those design files. You may be able to retain ownership depending on which companies you work with, but there is certainly a risk involved.

Overseas manufacturers often engage in reskinning, which is when they take the design of a previous device and copy it for a different customer, only changing the outer appearance, logo, colors, etc. If your product is unique and innovative, manufacturers could sell it to other companies, and you’ll be competing against your own product right from the start.

Quality Issues

Manufacturing your prototype or device on the other side of the world makes it difficult to be involved in the details of that process. This lack of insight into the manufacturing process can lead to product quality issues.

Another issue to consider is cost. Most companies choose to manufacture overseas because of the cheaper price. No matter where you choose to manufacture your product, you get what you pay for. If you’re looking for rock-bottom prices, the quality will be poor, whether you manufacture overseas or domestic.

Communication Barriers

The manufacturing companies overseas likely have sales reps or managers that speak decent English, but comprehending complex product requirements and technical specifications is difficult, even if you’re working in your native language. Working with foreign companies increases the likelihood that language and communication barriers could disrupt the process or lead to a less-than-ideal outcome.

Environmental and Ethical Considerations

You’ve probably seen news stories wherein big brands face backlash because of the labor conditions or environmental impact of their manufacturing facilities overseas. This should be a real concern for any businesses with overseas manufacturing partners. Working, knowingly or unknowingly, with manufacturers that break labor laws, aren’t following safety standards, or are hurting their local community with their waste disposal practices will have an impact on your reputation and your business.

Environmental Impact

Overseas manufacturing may cost less in dollars, but it can cost a lot ecologically. Make sure you’re aware of how your overseas manufacturer disposes of the waste byproducts made in the manufacturing process. Unfortunately, these waste products often end up in the air and water of the surrounding communities.

Another consideration is the environmental impact of shipping your products across the globe once they’ve been manufactured. Cargo ships can cause a significant impact to the planet in the form of carbon emissions and pollution. These factors need to be taken into consideration as you plan long term from your prototype to your final product.

Labor Conditions

Though great strides have been made when it comes to worker safety, factories and other areas related to manufacturing are still dangerous places to work, depending on the manufacturer. Determine what kind of manufacturer you’re working with before you begin. Are they going to adhere to safety standards? Many countries that are popular for overseas manufacturing have lax safety and labor laws.

It’s not your job to know the inner workings of someone else’s manufacturing plant, but at least get some information about safety, labor conditions, and environmental impact as you decide who to work with.

Avoiding Pitfalls

There are plenty of hurdles to overcome when manufacturing electronic devices, especially when doing so overseas. However, with careful planning and research, you can avoid most of the dangers inherent in overseas manufacturing.

Do Your Research

See if you can find anything about the reputation of the manufacturer you’re thinking of working with. Look into whether there are any other companies that use this same manufacturer. Speak to salesmen and others who work at the factory and ask them plenty of questions.

Find a Knowledgeable Partner You Can Trust

Overseas manufacturing is a popular practice for multiple reasons, but for many, the risks aren’t worth it. The prototyping and manufacturing process of electronic products in particular is complicated from a regulatory standpoint and can be very costly if mistakes are made.

VPI Technology is a prototyping and manufacturing company with decades of experience working with reputable companies on hundreds of different products. We work hard to be knowledgeable partners who walk you through every step of the process without any of the dangers of overseas manufacturing. If you’re interested in learning more about working with VPI Technology, contact us today.