Manufacturing WOFE/Joint Venture Contract Manufacturing Shelter Manufacturing Our Advantage Procurement Marketing Investments	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 the bricks and mortar, and has the 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 initial cost: minimal requirement for start-up capital and business expenses Low initial cost: no requirement to establish a legal and tax presence Low operational cost: reduced requirement to support costly overhead functions Flexibility: move from MSP to your own WOFE when the time is right for you Quick: you retain complete control over all the critical elements of the process, you can move as fast as you choose to Low risk: the financial risk is much easier to quantify, fewer things can go wrong Low risk: your commitment is short term, usually only one year at a time Quicker ROI than with an investment in your own WOFE You control and protect your intellectual property and know-how Foothold for further horizontal or vertical expansion into China Disadvantages of a Manufacturing Services Provider Potentially Higher Operating Cost: When you reach "critical mass" you may be able to operate more efficiently on your own You are relying on another company to take direction, communicate and integrate seamlessly with yours You are relying on another company to know their own business well and to learn yours You are relying on another company to know the local laws, business practices and customs of the community, to anticipate your needs and to communicate effectively with you The Blame Game Bottom Line: A Shelter MSP can be an excellent long term or interim business model for small to medium sized companies that want to operate their own manufacturing operation in China, while hedging expense and risk. Another objective may be maximizing speed, as they can be operating much more quickly with this model than they could with other options. 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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