As usual, the answers are not simple. At our last hardware startup we ended up manufacturing the mechanical parts (injection moulded case, springs, etc.) in China via our industrial design company but did PCBs, assembly and packaging locally in Poland. We simply didn't have enough prior experience to design a foolproof assembly process (which involved flashing, testing on GSM/GPS repeaters, etc.). We are considering moving the to production to China, but only once we solve any critical hardware bugs, smooth out the wrinkles in the flashing/testing process and reach sufficient quantities. With small orders of 100s of units and unexpected disasters like resistors tombstoning due to small errors in solder paste stencils, a five minute call to the manufacturing plant beats cross-timezone, cross-language and cross-culture debugging every single time.
