If China is a strategic market for your company—especially if you operate in the B2B sector—there will likely come a time when you consider producing or assembling your products in China.
Sometimes this decision is not optional. For example, if you supply components or semi-finished goods to a major client who manufactures in China, they may require you to be located nearby as a condition for continuing the business relationship.
In such cases, your factory’s location is practically dictated: you need to be close to your client..
In all other cases, you’ll need to make a crucial decision for the future of your business in China: where to locate your factory.
Carefully evaluate the opportunities presented to you and assess each potential location based on these five key factors:
- The Market size and trends for your type of product, and the presence of both customers and competitors.
- The Logistics infrastructure, for receiving, storing, and distributing your goods.
- The Availability and cost of materials and workforce, especially if you plan to manufacture locally.
- The Bureaucratic efficiency and the access to public and private support services , which can vary significantly from city to city.
- The and tax breaks for foreign investments , which tend to be more substantial in western and northern provinces.
Among all these factors , proximity to clients is by far the most important, and in my experience, this holds especially true in two B2B-related cases:
• The first case involves selling capital goods and equipment. Chinese clients rarely purchase this type of product without first seeing and testing it. That’s why most companies in China also have showrooms for their products. One of the most effective promotional tools in China is a factory visit, which works best when your clients are located nearby.
• The second case involves the supply of systems or engineering services that require frequent visits to your production facility or research center by the client. Helping them avoid long and expensive travel could be one of the reasons they choose to work with you.
Beyond these considerations, my final and most important recommendation when choosing a location is this: never make a decision without first conducting multiple site visits. Only by doing so can you truly "breathe" the local environment and understand whether it’s a place where you’d be willing to spend a few years of your life.
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