Contract manufacturing is a strategy for entering foreign markets or outsourcing production, in which a company contracts with local manufacturers in the foreign market to produce its product or provide a specific service. The company retains control over marketing, design, and branding, while the production is carried out by the partner.
The main advantage of contract manufacturing is the reduction of investment risk and rapid access to production facilities and local expertise. It is a flexible method for testing new markets without committing to high capital costs. A disadvantage is the potential loss of control over quality and production processes.
