Some U.S. companies that move manufacturing operations to China in the effort to reduce labor costs do not have a firm grasp of shipping schedules and other logistics that could slow imports and thus erode revenue.

According to a report in the March 2005 issue of Mechanical Engineering magazine, the supply chain that sends televisions, shoes, and other manufactured goods from China to the United States is complex and oftentimes too rigid to adapt to pressing schedules and seasonal deadlines.

"People sometimes don't understand all the complexity involved in going from truck-based shipping in a single country to cross-border, multimode logistics," explained a consultant interviewed by Mechanical Engineering. "We're talking about goods passing through the hands of 17 to 24 different parties - manufacturers, crate forwarders, customs and regulatory agencies, and more."

China sometimes requires five to six weeks to complete the loop from production to market delivery, said another consultant interviewed by Mechanical Engineering, a publication of ASME. Companies must mark down the price of products that arrive late to market, which erodes revenue. Importers can choose to pay for expedited shipping or hedge potential shortages by creating inventory, however these options also reduce profits.

In addition to dealing with the hidden costs in the supply chain, U.S. manufacturers that outsource to China must also be aware of cultural differences as well as China's lax approach to intellectual property agreements, says Mechanical Engineering.

Despite the challenges and potential snags, China is a lucrative market for many American manufacturers. China's economy has grown 9 percent annually for the past 15 years. China has emerged as the third-largest trading nation, behind the United States and Germany.

Recognizing the growth in manufacturing and commercialization in China, ASME has opened an office in Beijing to assess China's needs for U.S.-developed codes and standards. "Over the past several years, we have developed relationships with key Chinese officials, and having an on-the-ground presence in Beijing will help cement those relationships and further efforts to open Chinese markets to U.S. goods and services," said June Ling, ASME's associate executive director for codes and standards.