Shelter Manufacturing Services Provider (MSP)Shelter manufacturing is relatively new to China, though it has been practiced in Mexico for over 35 years. A Shelter Manufacturing Services Provider (MSP) has invested in a bricks and mortar facility in China and has a business license already in place. You simply contract with the MSP to provide you with the non-critical elements of running the operation, while you retain control over production, quality and intellectual property.
You move into the MSP's location, give the MSP job descriptions for the people you want to hire, set up your equipment and begin operations.
This arrangement allows you to begin operations much less expensively and much more quickly than setting up your own WOFE. It can also be an excellent way to make an incremental investment in China. You may decide to operate inside a shelter for a year or two, then move into your own WOFE when your business volume and confidence grows to critical mass and rational cost justification.
Advantages of a Manufacturing Services Provider
- Low barriers to entry: minimal requirements for start-up capital and business expenses
- Complexity: no requirement to establish a legal and tax presence
- Speed: Can begin almost immediately. WOFE/JV arrangements can take up to 18 months
- Flexibility: You can move from MSP to your own WOFE when the time is right for you
- Control: you retain complete control over all critical elements of the process and timeline
- Lower risk: You control and protect your intellectual property and know-how
- Expansion: Foothold for further horizontal or vertical expansion into China
Disadvantages of a Manufacturing Services Provider
- Cost: Operating costs may be slightly higher than your own WOFE/JV at full capacity.
- Trust: You are relying on us to take direction, communicate and integrate seamlessly with your organization
- Learning curve: We are comitted to understanding your business and executing flawlessly
- Outsourced knowledge: You rely on us to know the local laws, business practices and customs of the community, and to anticipate and resole local issues.
Bottom Line: A Shelter MSP can be an excellent long term or interim business model for companies that want the advantages of control and speed while hedging thier expense and risk. Shelters may be long-term or interim relationships, depending on the client's objectives. Setting up a Shelter will require less management time and resources than setting up a WOFE, but more than a Contract Management business model.
Give us a call at 810 229 5677 to learn more.
Read more about How Shelter Manufacturing Works.
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