Lean supply chain is China’s attraction for start-ups

Why does Liam Casey, CEO of PCH International, a major integrator of Chinese manufacturing services, want to talk with DIY-types who display their projects at Maker Faire? Casey says PCH gets 80% of its business from large corporations, and 20% from start-ups – garage-level innovators of the type who display at Maker Faire — and his gut feel is that successful products in the future will come from small start-ups. He was at Maker Faire suggesting that for Makers with an entrepreneurial spirit who are ready to make the jump to volume manufacturing, manufacturing in Shenzhen – which Casey claims has the leanest supply chain in the world – is the most cost-effective way to get products to market. As Casey says, “Use your strengths where they’re best located — Take a great idea and add a supply chain to it.”

After a product leaves the manufacturing line in Shenzhen it takes a mere 2-4 days for it to travel directly to the purchaser in the US, say, or Europe. Shipping directly from the production line means there’s no warehouse pipeline to be filled up. Since filling up the sales pipeline is a major sink for start-up funds, this lean supply chain allows new ideas to get to market sooner and for a smaller investment - a major attractor for VCs.  

So if you have a great product, is your first step to go knock on PCH’s front door? No – Casey is inundated with proposals from engineers with good ideas. Your first step is to get backing from an established funding source, such as a VC or angel investor, that acts as a “vetting” step indicating you’ve got a viable product and market, as well as a means of delivering the product to the market.

Now you’re ready to learn about manufacturing in China. According to Casey, you don’t have to be Walmart to take advantage of China’s lean supply chain – but you do have to have a great idea, a proven market, and a way to reach that market.

(For more on Maker Faire, see Steve Leibson’s coverage – and excellent photos — at Design News.)