Juan Ramon Zarco is the Managing Director of Magellan International (http://magellaninternational.webstarts.com/). You can see more content here on Docstoc.
Here are tips to outsourcing:
- Know your subsidies. Specifics markets and industries are subsidized more than others.
- Due diligence. Research your manufacturer.
- Isolate your IP. Make sure it is defensible or at least reserved in the US.
One of the things that I’ve noticed here is people with limited amount of budget, startup operations, try to just get a product manufacturer bring a product from Europe with high expense and try to buy it here and bring it here, and I thought of Outsourcing. And I think of three tips that I recommended to one small business operator.
Know about subsidies in foreign countries. If you want to have a product being manufactured in a country, it’s really very easy to do. They have specific markets and industries they want to focus on, let’s say, renewable energy. And if it focuses on export, they’d love to finance your manufacturing, and the cost of capital is very little for them. Sometimes it’s 0% interest rate.
But I would suggest, before you start doing a deal with those outsourcing manufacturers, do your due diligence to that manufacturer. Is that person reliable? How’s the track record? Make sure that they look at your operations off shore to see whether or not they’re capable of doing that export in manufacturing.
And most importantly, I think you have to isolate your IP. Make sure that whatever IP you hand off to them, it’s defensible or at least reserved here in the US, so therefore you’re not losing anything being replicated and being manufactured by that same company to be sold to other markets.