Per-Erik Jonsson: Producing in China vs Sweden

Per-Erik Jonsson founded Playbox AB in 1995 and has around 40 years of experience in procurement and production. For decades, the company relied on China for manufacturing products and parts, but a few years ago, they chose to move a significant portion of their production back to Sweden.

What are the advantages and disadvantages of producing in China?

• "Well, it has been very cheap. You had to compete, and for that, you needed to manufacture your goods there. Over the past decades, more and more factories have moved their production primarily to Asia," says Per-Erik.
• "The main reason is the much cheaper labor costs, but a lot has changed in China in recent years. In just the last 5 to 6 years, wages have increased significantly. If you go back 7 years, an average worker might have earned around $100, but today, if you look at good office personnel with some experience, you'll likely have to pay at least $2,000. While this still isn't the same base level as here, the difference isn't as large anymore," Per-Erik explains.

He goes on to say that perspectives on sustainability have changed significantly over the past 35 years, which is a positive development. Per-Erik emphasizes that it has become increasingly important to consider and take responsibility for the environment.

• "You have to ask yourself, is it sustainable to produce goods in China to be sold on the other side of the world? Obviously, it's not. When you manufacture products in China, the electricity primarily comes from coal-fired power plants, but when you produce here in Sweden, the power comes from wind, water, or nuclear energy. That's the major advantage," says Per-Erik.

What considerations must be made when deciding where to produce?

• "I would say a huge factor is time. When we produced in China and wanted to place an order, I had to wait 4 months before the goods arrived — production time plus shipping time. In Sweden, you can order today and get delivery as soon as next week," says Per-Erik.

According to Per-Erik, time plays a critical role. Production in China involves long lead times, whereas production in Europe can take just a few days. This has had a positive impact on several aspects of the business, including the reduction in the need for large and costly inventories.

• "This means you don't need to build up large inventories, as you might otherwise want to. If I buy a container of beads, I won't sell that entire container in one day, so the container would sit in storage, which costs money, as we know. But if they're produced in Sweden, I can practically sell first and produce afterward, reducing the need for large inventories," Per-Erik explains.

What advice do you have for buyers looking for new production countries?

• "I personally believe that in the future, when you buy a product — no matter where it's produced — it will have some kind of rating on it. You'll be able to read on the packaging what the CO2 impact of that product is," says Per-Erik.

He further explains that if a product is made in China, it will have a higher CO2 rating. According to Per-Erik, this is partly due to transportation and partly because factories in China use fossil fuels for energy. Additionally, Per-Erik believes it's only a matter of time before some form of tariff is introduced for products with high climate impact. He argues that the growing awareness of climate impact will lead to increased costs, making it more relevant to consider alternatives to outsourcing production.

• "It may still be a bit more expensive to source from nearby regions, but the day environmental taxes are introduced is just a matter of time. If you source locally, you can achieve enormous cost savings," says Per-Erik.

28 Years of Playbox AB - A Timeline:

• 1995 – Playbox was founded by Per-Erik Jonsson, specializing in manufacturing and selling toys and creative products for children. All production was located in China.
• 2002 – Playbox began producing craft products, particularly fuse beads, which sold well.
• 2012 – The business grew, requiring larger storage facilities. The headquarters and warehouse were moved to Älmhult, Sweden, where parts of the production would eventually take place.
• 2014 – Since this year, the company has had a presence in China through its wholly-owned subsidiary, Pulebo.
• 2016/2017 – Playbox moved the production of their best-selling product, plastic beads, back to Sweden.
• 2020 – Per-Erik Jonsson sold Playbox AB, which now sells products in over 30 countries.

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