Outsourcing of production to China: Case studies on perceived pros and cons and impact on product quality

China is a growing developing country with a great growth and potential. The country is the world´s largest exporter of goods and services and has the second largest economy in the world, so it is easy to understand the latest increased interest in the country. In today´s fast and growing technical society, the use of outsourcing is a way of facing the challenges and competition. More and more multinational enterprises (MNE) choose to establish production in China and through outsourcing, companies can focus on core competencies, achieve cost benefits etc. However, most of the MNEs are mentioned in terms of outsourcing and small and medium enterprises (SME) are overlooked. Nevertheless, SMEs constitute the majority of all activities in a country and play a major role in the development of a nation´s economy by providing employment. The study consists of a comprehensive literature review to create the context of the subject and is also supported by 4 case studies. These case studies took place in the form of interviews with representatives from 4 Swedish SMEs who have outsourced all or part of their production to China. The study is intended to provide an understanding of how outsourcing of production to China can benefit SMEs and the types of risks that may be involved with the internationalization. The study will also provide an understanding of the quality impact that is in view of the perceptions of ”Made in China” and China´s manufacturing industry. The major benefits of outsourcing production to China identified in the study are; achieve cost benefits, focus on core competencies, access to talent and skills, closer to raw materials and resources. The main disadvantages identified in this study are; cultural differences, intellectual property rights, lead time, wrong supplier choice, reduced control, incorrect documentation and packaging issues. The results of the study also indicate that there are characteristics of SMEs who outsource due to lack of resources in terms of time, economics and competence proposed by the theoretical framework. The case companies in this study have also not experienced any remarkable impact on quality. The empirical data indicate that the companies have experienced an overall good product quality impact, but clearly point out that communication and relationship with the supplier are crucial for the outsourcing result