Why digital sourcing platform Fictiv stays in China when others leave

As many companies as possible shifting supply chains outside of China in response to the uncertainty of geopolitical tensions and Beijing’s “zero COVID” policy, Fictiv is strengthening its outpost in the country.

Based in San Francisco Made up operates a platform that aims to simplify the hardware procurement process and connects hardware companies with suppliers worldwide. When it comes to sourcing high-end parts for products like medical equipment, surgical devices and even rockets, there’s probably no better place than China. That’s why Fictiv set up an office there to be closer to its supplier network. Within five years, the team grew to 60 people in the southern industrial center of Guangzhou.

Despite the challenges surrounding COVID restrictions and geopolitics, “the manufacturing base in China is not going away,” Fictiv founder and CEO Dave Evans said in an interview with TechCrunch. “Shenzhen was a fishing village 30 years ago, and now it is the manufacturing center of the world. It will take some time for other third-party ecosystems to really catch up,” he said, adding that Apple and its contract manufacturer Foxconn have offered a strong playbook for a generation of factory owners in the country.

Digital procurement is proving especially useful during COVID. The traditional way, according to Evans, is a manual process that relies on face-to-face meetings: In China, you’ll need to find a shifu—an experienced Chinese master—who will sit down, sip some tea, and then slowly tell you from his 30-year molding experience to change this and that on your 3D drawing. Fictiv uses AI to replace this random human interaction with allowing product developers to run simulations on 3D designs and get a quote and estimated production time.

Despite its focus on digitization, Fictiv emphasizes the importance of on-site teams in its sourcing destinations. Evans used to travel to China every quarter, but hadn’t since the COVID outbreak, which imposed strict restrictions on inbound travel. Huaqiangbei, the world’s largest e-commerce marketplace located in the heart of Shenzhen, has been attracting a flood of foreign hardware manufacturers. Now foreigners are a rare sight.

“Because it’s been so difficult to access China in recent years, the value we have in combining software, technology and all the AI ​​that we’ve built with boots on the ground right next to our manufacturing partners has built a really compelling proposition for all customers, because they can’t fly to China,” the executive said.

While China remains an integral part of Fictiv, the company is also diversifying. “When the next big thing happens, how will your business change? And that’s what I would say to all founders who are thinking about this — are you building a truly sustainable supply chain?” Evans asked.

That’s partly why Fictiv recently opened an office in India, which “is very strong and getting stronger every month” thanks to the “large population, relatively low costs and growing talent there.”

The company has built a global network of 250 verified manufacturing partners, a third of which are in China, where manufacturing capacity is often larger. The remaining suppliers are from India and the USA. To date, Fictiv has produced approximately 20 million parts for thousands of customers. He manages a team of just over 300 employees worldwide.

OS for product developers

Nine years after its launch, Fictiv is building a new business line. The company’s goal is to enable early-stage product development, meaning long-tail volume that Foxconn would find too small. Instead of hiring factories to produce tens of thousands of units, it works with companies trying to get 10 to 1,000.

The company’s new service is a work collaboration platform for everyone involved in the product development lifecycle. Unlike its sourcing platform, which has its profit margin built into the production model, the service charges an annual membership fee. Using the software, the engineer can upload a product design with specifications of the material used, etc. The supply chain specialist can then come in to estimate the lead time and target price, followed by the quality control person who makes additional comments. Finally, the manager will approve the pricing before the buyer can proceed with the purchase.

The idea is to capture the conversation and QA process of product development in an integrated platform, instead of being scattered across emails and spreadsheets, as communication used to be.

“For engineers who have a team, it’s almost like a 3x improvement [on productivity] because of all the tasks you eliminate. For design firms or people who manage many clients, [the software] helps them organize a lot of their workflows, and it gives them an easier way to fill out and keep track of all the different projects that are going on,” Evans noted.

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