It is not unusual to see savings of 20-50% on production costs and more than 50% on tooling costs. The extent of savings is further complicated by the process at which the final price is arrived at. In the US there is generally limited negotiation in the area of price. In China the process of arriving at the final price is a ritual. The first price offered often bears no relation to the cost of production. It may just be an arbitrary price arrived at through guessing what the "traffic will bear". Often, the Chinese see U.S. companies as having very deep pockets. Do not expect the first price offered to be the final price and do not lose patience. After you receive the first offer, be prepared to respond with an explanation of why that is not acceptable! A reasonable negotiation might include a discussion of domestic pricing and the need to see a cost savings of X percent in order to consider using a Chinese source.

Even more than in the US, you can expect to see a wide variation in prices between factories as they respond to identical Requests for Quotation. This variation could be due to the nature of the factory:

-  rural vs village vs large city
-  government owned vs Joint Venture vs entrepreneurial Chinese owned
-  manual controlled equipment vs semi-automated vs CNC
-  growth minded vs short term profit minded management

Also, the actions of an Import/Export company involved in the transaction will affect the price. None but the largest industrial concerns are authorized to do direct export and exchange currencies. In most cases, a government-authorized Import/Export company handles this. Some I/E companies take little or no profit from a transaction, being satisfied with profits from the currency exchange and receiving government encouragement to maximize the flow of dollars. Some extract a high profit. The bottom line, however, is that with patience, the world's lowest costs can be achieved through this negotiating process.