Outsourcing your production abroad

What is outsourcing?

Outsourcing involves contracting out certain tasks, processes or services to another business in another country. This allows you to focus on your core activities and save costs.

Which products and services are suitable for outsourcing?

Some products or orders require a large number of personnel to carry out the work. This is a good opportunity for outsourcing. For example, having a large batch of clothes made.

When outsourcing services, you can think of call centers and IT support.

Your core activities are less suitable for outsourcing. These are activities that distinguish you in the market and make customers want to buy your particular product. For example, the design or pattern for clothes you have made.

Check if your product is suitable for outsourcing

Does making your product require technical knowledge or a particular raw material? Check whether these are available in the country you want to move your work to.

Having products made in another country can be more difficult than in the Netherlands. For example, due to language and cultural differences (in Dutch).

Protecting your intellectual property (IP) may also be more difficult abroad. For trademarks and designs, you can often apply for rights for the entire European Union at once. However, with patents, you must choose which countries or group of countries you want to apply for protection in. Discuss with a law firm that specialises in this area how best to proceed. Also make sure that the law firm is familiar with the laws of the country in which you want to do business.

Choose nearshoring or offshoring

You can have your production carried out nearby, ‘nearshoring’, or far away, ‘offshoring’.

What is nearshoring?

Nearshoring is when you choose a production partner close to the Netherlands. For example, in Eastern Europe . Advantages include shorter delivery times and fewer language and cultural differences.

What is offshoring?

Offshoring means outsourcing your production further away, for example in the Philippines. The wages in these countries are often even lower, which means you save more on labour costs. But other costs are often higher, such as transport costs

Finding a production partner abroad

Are you in search of a production partner or supplier? You can search for a production partner or supplier via:

• the Enterprise Europe Network (EEN). You can quickly and easily make new international contacts through this professional network with 600 organisations in more than 600 countries.
• the advisers of the Netherlands Enterprise Agency (RVO). They will be happy to help you find a production partner abroad.
• the Centre for the Promotion of Imports from Developing Countries (CBI) can also help you make contacts.

The KVK Advice Team can also help you look for partners abroad.

Check the reliability of your business partner

Always research the company you will be working with. This way you limit the risks. For example, check whether your business partner is registered in a foreign business register. Or have the company screened by a trade information agency.

Agreements and liability

Always make sure you lay down agreements in writing. For example, who is liable for any damage caused by a defect in your product? Do you share confidential data with your business partner? Then consider a non-discloosure agreement.

Check the rules on product safety

Are you going to have products made abroad and then sell them in the EU? You will have to deal with laws and regulations around product safety. You must comply with general regulations and product requirements. And rules around safety, health, economy and environment.

Do you want to sell the products to consumers? And are the products not intended for eating or drinking? Then you must comply with EU product safety rules. What exactly you have to do for product safety and what you are responsible for depends on your role in the production chain.

Importing your products

Do you outsource your production outside of the EU and have the products imported into the Netherlands? You must file a declaration with Dutch Customs and pay import duties and VAT. You will also incur other costs, such as customs clearance fees.

If there is a trade agreement between the EU and the country where you outsource your production, you may pay less or even no import duties.

Within the EU there is free movement of goods. This means that you do not have to submit an import declaration to Dutch Customs, but, you do have to pay VAT.

Useful tips

• Get information about outsourcing from the advisers of the Netherlands Chamber of Commerce KVK, or Netherlands Enterprise Agency, RVO (in Dutch).
• Contact representatives of RVO's foreign network: embassies, consulates, business support offices, innovation attachés and agricultural councils.
• Take part in a trade mission.