Over the last year we’ve built relationships with companies in Brazil, Russia (well, Ukraine, but close enough), India, and South Africa, while living in China – completing the BRICS countries. To me this has been a tangible sign of which parts of the world are actively developing hardware products and engaging in manufacturing. However, these partners have uniquely different needs from our US customers, more interested in the robustness and variety of component supply in China, rather than simply lower labor costs.
Our BRICS customers have a couple common themes to their businesses. Often these hardware companies were begun in response to a specific domestic need, but then quickly expanded to become exporting themselves, whether to other countries in their region, or countries with a common linguistic and colonial past (India to Nigeria and Bangladesh, Brazil to Angola and Mozambique, Ukraine to the rest of the former USSR). They most often begin manufacturing domestically, often smaller volumes in house, all the while relying on imports for many critical inputs. Through these experiences, they build real knowledge of their product, manufacturing, and the industry they serve.
In working with our new partners, the advantages of China have become apparent. For our US customers, China will always have the drawback of not being as quick or convenient as a domestic distributor. However, we find that our BRICS partners often don’t have these domestic resources. Mostly commonly they are also working with these same US distributors – Mouser, Digikey, etc. – for their components. They are well versed in international logistics and importation. Discussions can be of components as small as PCB connectors and heat shrink tubing to long distance radios, all of which are now readily available from domestic Chinese manufacturers. Therefore working directly with China can be on par in terms of convenience and speed for these customers, while adding in benefits such as lower cost and direct manufacturer contact.
We have further found that our BRICS partners are fairly price sensitive. Not only are costs generally lower in these countries, but import tariffs and VAT systems can serve to multiply the effect of any price increase (or decrease, in our case). These restrictive import systems, and sheer distance with a country like Brazil, magnify the need for inspection and verification on our end and confirmation with our customers before shipping product. Once it leaves China, it’s not coming back, so it better be right.
It also bears mentioning what these customers are less interested in. Of the BRICS countries, labor costs in China may be the highest, therefore these customers are often less interested in having assembly or simpler services done in China. However we have found that these BRICS companies are interested the more complex services available in China, such as 4th axis milling, SLA 3D printing, or BGA PCBA, which might not be as available in their home markets.
Lastly, it is my experience that folks in BRICS countries (outside of China, of course) have about as much Mandarin ability as the average American – which is to say, very little. Therefore we feel we can also help these customers get past the AliExpress level of the Chinese economy, just as we have done for our US customers.
We look forward to continuing to build relationships with companies in the BRICS countries, and hopefully beyond as other markets start actively developing and manufacturing their own products. A whole world of hardware.
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