Why is it cheaper to manufacture in China — and when isn't it?

The ecosystem, not the wage

Wages in Chinese manufacturing regions have risen for years; the advantage persisted anyway, because it was never mostly about labour. It's density: within a single region you can find the moulder, the toolmaker, the platers and anodisers, the PCB house, the packaging plant and forty component suppliers — often within an hour of each other. That density compresses lead times, crushes logistics friction between process steps, and creates competition at every link. Add deep tooling ecosystems that make moulds faster and cheaper, and scale that amortises everything across enormous volumes, and you get the gap — structural, not cyclical.

Where the gap is biggest — and smallest

The advantage compounds for products that touch many processes: consumer electronics, connected devices, anything with tooling plus electronics plus finishing plus packaging. It shrinks for products that are mostly one process — simple fabrication, moulding you can do anywhere — and it can invert entirely once freight, duty, inventory carrying and coordination overhead join the landed-cost model. A unit price advantage that evaporates in the freight line isn't an advantage; it's a spreadsheet illusion.

When "make it here" wins

Local manufacture earns its case more often than the folklore admits: low volumes where tooling amortisation dominates, heavy or bulky products where freight punishes distance, fast-iteration programs where a supplier an hour away beats one an ocean away, products with regulatory or procurement preferences for local supply, and prototypes — almost always. This is why our position is that China is a capability, not a toll gate: the decision belongs to evidence, product by product, and some of our recommendations are "don't import this one."

The decision, done properly

Build the landed cost for China, quote the local alternative at your real volumes, and weigh the unquantified lines — iteration speed, IP posture, supply-chain risk appetite — explicitly instead of pretending they're free. The cheapest factory is the one that's cheapest after everything lands, including the things that never appear on a quote.