{"id":206343,"date":"2021-05-31T19:32:59","date_gmt":"2021-05-31T06:32:59","guid":{"rendered":"https:\/\/legalvision.co.nz\/?p=206343"},"modified":"2023-10-05T16:21:03","modified_gmt":"2023-10-05T03:21:03","slug":"manufacturing-overseas","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/corporations\/manufacturing-overseas\/","title":{"rendered":"Should Your New Zealand Business Be Manufacturing Overseas?"},"content":{"rendered":"\n<p>A common question from businesses that sell products is whether (and when) they should manufacture their product overseas. This move can be a scary prospect for your business, especially if you have always been based in New Zealand and have no connections in other countries. However,&nbsp;<a href=\"https:\/\/legalvision.co.nz\/regulatory-and-compliance\/manufacturers-obligations-shipping\/\">manufacturing overseas<\/a>&nbsp;can lead to efficiencies, distribution benefits and cost savings. It is an exciting possibility to consider. This article will cover:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>what manufacturing overseas practically involves;<\/li>\n\n\n\n<li>your different options; and<\/li>\n\n\n\n<li>factors that determine whether your business should be manufacturing overseas.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">What Does Manufacturing Overseas Involve?<\/h2>\n\n\n\n<p>Manufacturing overseas refers to a situation where your:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>product;<\/li>\n\n\n\n<li>select lines of products; or&nbsp;<\/li>\n\n\n\n<li>parts of those products;<\/li>\n<\/ul>\n\n\n\n<p>are produced by manufacturers overseas to sell either in New Zealand or a different country.&nbsp;<\/p>\n\n\n\n<p>While the concept is simple, you can arrange to have your business\u2019 product manufactured overseas in several ways. It can sometimes be confusing and overwhelming. However, ultimately, there are two major ways for a small or medium business to shift production overseas.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table><tbody><tr><td>Contract Manufacturing<\/td><td>Where an overseas manufacturer produces part or all of your product on your business\u2019 behalf, to specifications and a design provided by your business. It is clear in these arrangements that the product is ultimately your business\u2019, but a manufacturer overseas is being paid to produce it.<\/td><\/tr><tr><td>Licensed Manufacturing<\/td><td>An overseas manufacturer or other company has the right to produce and market your product. Essentially, your business is&nbsp;<a href=\"https:\/\/legalvision.co.nz\/commercial-contracts\/licence-and-contractor-agreements-new-zealand\/\">granting a licence<\/a>&nbsp;to another business to use your intellectual property. These arrangements can be advantageous to businesses who want to compete in overseas markets but do not want to undertake as many of the associated responsibilities to do so or overcome additional hurdles.&nbsp;<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Additionally, a third option exists for larger businesses with more resources to manufacture their products overseas.<\/p>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table><tbody><tr><td>Setting up a manufacturing facility (e.g. factory) overseas:<\/td><td>A larger business can work with an overseas company in the associated country to better understand the economic and regulatory requirements. This option usually involves significant cost and up-front expense, which limits smaller and medium businesses from partaking.&nbsp;<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">Should Your Business Be Manufacturing Overseas?<\/h2>\n\n\n\n<p>Understanding the different options when manufacturing overseas is just part of the puzzle. Most product-based businesses in New Zealand typically shift to&nbsp;manufacturing overseas at one point or another to reduce costs and gain other efficiencies.&nbsp;However, it is not always clear when to take the leap. It will generally depend on the stage of your business\u2019 growth.&nbsp;There are some key points to consider when determining if your business should manufacture your products overseas.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Scale and Production<\/h3>\n\n\n\n<p>If your business has the potential for significant growth or requires large-scale production, manufacturing overseas might offer the capacity and infrastructure necessary to meet your growing demands.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Cost Reduction<\/h3>\n\n\n\n<p>Depending on which country you manufacture in, overseas manufacturing can provide cost advantages due to lower labour and production costs. However, you will also need to take into account the costs of shipping your products back to New Zealand, and any minimum order quantities imposed by the manufacturer.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Ownership and Intellectual Property<\/h3>\n\n\n\n<p>Another consideration is to maintain control of your product. Especially for smaller businesses whose key asset is <a href=\"https:\/\/legalvision.co.nz\/intellectual-property\/protect-intellectual-property-overseas\/\">intellectual property<\/a>, you want to ensure you are adequately protecting your product when manufacturing it overseas. You will need to evaluate the legal protections in the chosen country and take appropriate measures to safeguard your intellectual property.&nbsp;<\/p>\n\n\n\n<p>Carefully consider what details to include in the manufacturing agreement you sign with the overseas manufacturer. Ultimately, that document will set out the terms and conditions for producing your product.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Quality Control&nbsp;<\/h3>\n\n\n\n<p>Manufacturing in New Zealand may provide you with more oversight and control over the manufacturing process than if the product was manufactured overseas. Where you do manufacturer overseas, you must ensure that the manufacturer maintains the quality standards you expect for your products. Conduct due diligence on potential partners, visit their facilities if possible, and establish clear communication channels to address quality control issues.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Market Proximity<\/h3>\n\n\n\n<p>Manufacturing in New Zealand may be advantageous as the product is closer to your consumers. This may enable quicker response and delivery times, and reduced shipping costs. However, overseas manufacturers may have the capacity to manufacture your products more quickly than a local manufacturer. This is why it is important to discuss and evaluate the lead times of any potential manufacturers.&nbsp;&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Regulations and Logistics&nbsp;<\/h3>\n\n\n\n<p>Additionally, there are usually regulatory and logistical questions that come with manufacturing in another country. You should consider the reliability and efficiency of the supply chain. Getting advice on industry regulations and other possible hurdles can help you decide whether it is the right time for your business. Many New Zealand businesses start small, with an agreement to manufacture at a lower scale with an overseas operation.&nbsp;With time, you can decide to&nbsp;ramp it up.<\/p>\n\n\n\n<p>There is a range of professionals you can engage to get further advice. Talking to a commercial lawyer or a business advisor at the <a href=\"https:\/\/legalvision.co.nz\/corporations\/regional-business-partner-network\/\">Regional Business Partner Network<\/a> are two examples.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Economic Impact and Ethical Considerations&nbsp;<\/h3>\n\n\n\n<p>Manufacturing locally may contribute to job creation and helps support local businesses, which can have positive effects on the community.&nbsp;<\/p>\n\n\n\n<p>You should also consider the labour laws of the countries in which you are considering manufacturing. Think about the ethical implications of manufacturing in specific countries, taking into account factors such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>workers\u2019 rights;&nbsp;<\/li>\n\n\n\n<li>minimum wage;&nbsp;<\/li>\n\n\n\n<li>health and safety standards; and&nbsp;<\/li>\n\n\n\n<li>child labour regulations to ensure alignment with your business values.<\/li>\n<\/ul>\n\n\n    <div class=\"my-7 lg:my-10 border-y-2 border-gray-100 py-7 lg:py-10 flex flex-col sm:flex-row items-start gap-10\">\n                    <img decoding=\"async\" class=\"w-52 mx-auto my-0! rounded\" src=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/2\/2023\/08\/18195054\/nz-corporate-governance-guide-560px.jpg\" alt=\"Front page of publication\"\n                 loading=\"lazy\" width=\"208\" height=\"298\">\n                <section>\n            <div class=\"text-2xl font-bold\">Corporate Governance Guide for SMEs in NZ<\/div>\n            <div class=\"body-text\">\n               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Usually, due to cost savings and other efficiencies, most businesses want to produce their products overseas. However, it can be tricky to work out at what stage of your business\u2019 development to take the overseas plunge. Understanding the different kinds of manufacturing options for a New Zealand-based business is a good starting point. You can also seek&nbsp;advice from commercial growth and legal experts.&nbsp;<\/p>\n\n\n\n<p>If you would like more information about manufacturing overseas and whether it is a good option for your business, our experienced <a href=\"https:\/\/legalvision.co.nz\/regulatory-lawyers-lp\">regulatory and compliance lawyers<\/a> can assist as part of our LegalVision membership. You will have unlimited access to lawyers who can answer your questions and draft and review your documents for a low monthly fee. Call us today on <a href=\"tel:+64800005570\" class=\"AVANSERnumber dynamic-number\">0800 005 570<\/a> or visit our <a href=\"https:\/\/legalvision.co.nz\/membership\/\">membership page<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Frequently Asked Questions<\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1622441701562\"><strong class=\"schema-faq-question\"><strong>What is the advantage of manufacturing overseas?<\/strong><\/strong> <p class=\"schema-faq-answer\">It is usually cheaper to manufacture any product overseas. This can also open the door to other operational and commercial opportunities in other countries, with growth possibilities for your business.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1622441724280\"><strong class=\"schema-faq-question\"><strong>Do New Zealand businesses need to set up their own manufacturing processes overseas?<\/strong><\/strong> <p class=\"schema-faq-answer\">No. While some larger New Zealand businesses do so, many smaller or medium businesses strike contract manufacturing and licensing agreements with manufacturers overseas instead.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1622441737766\"><strong class=\"schema-faq-question\"><strong>Should small businesses be manufacturing overseas?<\/strong><\/strong> <p class=\"schema-faq-answer\">It depends on the scale of the business\u2019 production and product growth, the nature of the product and industry, and its financial and commercial considerations. As the small business grows larger and looks to expand production, it can be a significant cost-saver to have a product manufactured overseas.<\/p> <\/div> <\/div>\n","protected":false},"excerpt":{"rendered":"<p>A common question from businesses that sell products is whether (and when) they should manufacture their product overseas. This move can be a scary prospect for your business, especially if you have always been based in New Zealand and have no connections in other countries. However,&nbsp;manufacturing overseas&nbsp;can lead to efficiencies, distribution benefits and cost savings.<a href=\"https:\/\/legalvision.co.nz\/corporations\/manufacturing-overseas\/\">Continue reading <span class=\"sr-only\">&#8220;Should Your New Zealand Business Be Manufacturing Overseas?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13388,"featured_media":201684,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"202223,219316,219097,202036,2059,208300","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[14],"tags":[54,497,907,908,910],"class_list":["post-206343","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-corporations","tag-medium-business","tag-corporation","tag-manufacturing-overseas","tag-overseas-supplier","tag-manufacturing-agreement"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Should Your Business Be Manufacturing Overseas | LegalVision NZ<\/title>\n<meta name=\"description\" content=\"Manufacturing overseas can lead to efficiencies and cost savings. This article explores whether it is right for your NZ business.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/legalvision.co.nz\/corporations\/manufacturing-overseas\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Should Your Business Be Manufacturing Overseas | LegalVision NZ\" \/>\n<meta property=\"og:description\" content=\"Manufacturing overseas can lead to efficiencies and cost savings. This article explores whether it is right for your NZ business.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/legalvision.co.nz\/corporations\/manufacturing-overseas\/\" \/>\n<meta property=\"og:site_name\" content=\"LegalVision New Zealand\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/LegalVision\" \/>\n<meta property=\"article:published_time\" content=\"2021-05-31T06:32:59+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-10-05T03:21:03+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/2\/2021\/01\/11151051\/sebastian-herrmann-GYQl88LcLok-unsplash.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1111\" \/>\n\t<meta property=\"og:image:height\" content=\"740\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Tayler Berridge-Smith\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@LegalVision_law\" \/>\n<meta name=\"twitter:site\" content=\"@LegalVision_law\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Tayler Berridge-Smith\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"6 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/legalvision.co.nz\\\/corporations\\\/manufacturing-overseas\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/legalvision.co.nz\\\/corporations\\\/manufacturing-overseas\\\/\"},\"author\":{\"name\":\"Tayler Berridge-Smith\",\"@id\":\"https:\\\/\\\/legalvision.co.nz\\\/#\\\/schema\\\/person\\\/6c48ae54ef07bfb9da8c62f8594bd91e\"},\"headline\":\"Should Your New Zealand Business Be Manufacturing Overseas?\",\"datePublished\":\"2021-05-31T06:32:59+00:00\",\"dateModified\":\"2023-10-05T03:21:03+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/legalvision.co.nz\\\/corporations\\\/manufacturing-overseas\\\/\"},\"wordCount\":1226,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\\\/\\\/legalvision.co.nz\\\/#organization\"},\"image\":{\"@id\":\"https:\\\/\\\/legalvision.co.nz\\\/corporations\\\/manufacturing-overseas\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/img.legalvision.com.au\\\/wp-content\\\/uploads\\\/sites\\\/2\\\/2021\\\/01\\\/11151051\\\/sebastian-herrmann-GYQl88LcLok-unsplash.jpg\",\"keywords\":[\"medium business\",\"corporation\",\"manufacturing overseas\",\"overseas supplier\",\"manufacturing agreement\"],\"articleSection\":[\"Corporate Articles\"],\"inLanguage\":\"en-NZ\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/legalvision.co.nz\\\/corporations\\\/manufacturing-overseas\\\/#respond\"]}]},{\"@type\":[\"WebPage\",\"FAQPage\"],\"@id\":\"https:\\\/\\\/legalvision.co.nz\\\/corporations\\\/manufacturing-overseas\\\/\",\"url\":\"https:\\\/\\\/legalvision.co.nz\\\/corporations\\\/manufacturing-overseas\\\/\",\"name\":\"Should Your Business Be Manufacturing Overseas | LegalVision NZ\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/legalvision.co.nz\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/legalvision.co.nz\\\/corporations\\\/manufacturing-overseas\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/legalvision.co.nz\\\/corporations\\\/manufacturing-overseas\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/img.legalvision.com.au\\\/wp-content\\\/uploads\\\/sites\\\/2\\\/2021\\\/01\\\/11151051\\\/sebastian-herrmann-GYQl88LcLok-unsplash.jpg\",\"datePublished\":\"2021-05-31T06:32:59+00:00\",\"dateModified\":\"2023-10-05T03:21:03+00:00\",\"description\":\"Manufacturing overseas can lead to efficiencies and cost savings. 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