OEM Manufacturing
5 Questions to Ask Yourself When Selecting an OEM Manufacturing Company in China
Making products by outsourcing manufacturing to China can be an incredibly rewarding experience. Not only does it enable you to develop the item exactly how you want, but it also allows you to create high-quality products in much larger quantities than you would otherwise be able to make on your own. For these reasons, more and more entrepreneurs are choosing to manufacture their products in China by enlisting the help of an OEM manufacturing company.
However, with all the options currently available, selecting the right OEM company can seem like a daunting task.
Asking yourself the right questions before you begin production with a new partner can save you time and money in the long run, ensuring that you have an efficient manufacturing experience from start to finish. Let’s get started!
Question #1: What Are My Requirements & Standards?
The first question to ask yourself before approaching an OEM company is to develop an exhaustive understanding of your product. Not only should you have a general idea of the product, but also write down the product specifications in detail like:
- Colors
- Materials
- Dimensions
- Components
- Manufacturing techniques
- Manufacturing process
- Quality standards
- Packing requirements
- Import and export requirements
When you manufacture a product, the outcome can be drastically different based on what type of raw materials or techniques are used. It’s important to establish your criteria beforehand so that you know which company will create the best result for you.
Question #2: What Is My Budget Limit?
It’s important to define the upper limit of your budget when outsourcing your production to any supplier, because a more affordable company may not be able to provide you with the same quality and efficiency as a more expensive option. And you may not want to sacrifice the product quality just for saving a bit of money. That being said, while the price is certainly something you should consider when shopping for an OEM supplier, it shouldn’t be the only deciding factor.
However, it’s not a good idea to set an exact budget number right off the bat before all other factors are not considered.
In this case, you can estimate the price range for this manufacturing project based on what you think would work best for your company. Then you can also compare various service providers to have a better understanding of the perfect investment for your business.
Question #3: What Should I Do to Conduct Due Diligence?
After fully considering your needs, then you can conduct due diligence to know whether the manufacturing company is knowledgeable about your specific product type, or if it has worked with similar products before.
The best way to find this information out is by researching the company website to know their background, qualifications, service category, past work, etc.
You can also ask for references from a supplier you trust or reach out to other businesses that are manufacturing a similar product.
Doing detailed due diligence is not an easy task, check out our blog to know how to spot a real factory or a trading company in China.
Once you have all the relevant information, compare different manufacturers’ strengths and weaknesses against your needs and make a decision based on what will work best for your business.
Question #4: A One-Stop Shop Factory VS. Different Suppliers
Then you also need to think about do you want to use a one-stop shop factory that can fulfill all your needs or different suppliers who can specialize in different areas.
A one-stop shop factory is a model whereby one company manufactures, assembles, and distributes the product that they have been commissioned for. This factory can potentially increase efficiency and reduce production costs as a result of having all production processes under one roof. However, this could also limit your options for product customization if their manufacturing capabilities are limited.
If you need to make products with different materials or designs than what they produce, then you will need to find a different supplier. Furthermore, there may be certain materials or suppliers that are hard or expensive to acquire domestically in China so it may be necessary to find another supplier.
If time is not a concern and cost savings are your main priority, then finding one supplier might be the best option for you. However, if flexibility is more important for you, then working with multiple suppliers would be recommended.
Question #5: How to Guarantee My Product is Perfectly Working?
One way that a manufacturing factory can prove its commitment to quality assurance is by providing a sample of your product for inspection. In this case, requesting a product sample before placing your first order can be a good idea.
If there are any flaws, you have the opportunity to give feedback before mass production. In other words, if the manufacturer has nothing to hide, then there should be no problem with sending out a sample or a finished product for testing. This eliminates the risk of encountering problems and ensures your customers get what they pay for!
In addition, it’s imperative to look at whether your potential manufacturing supplier has an in-house quality inspection team or not. You want someone who will stand by you when things go wrong because inevitably something will go wrong at some point. If they assure you of having quality inspections available, ensure that the inspection report specifies what exactly is being inspected and which parts aren’t included.
Final Thoughts
Ultimately, your choice of manufacturer in China should be determined by what matters most to you and how much involvement you want with the production process.
Keep in mind that there is no perfect way of choosing a manufacturer but it’s worth taking some time to think about what’s important and how much you want to be involved in the process.
If you need any help, look no further than Shield Works. Founded in 2020, we are an offshoot of the British-owned and managed C2W Group located in the South China Greater Bay Area offering high-quality and competitive manufacturing services, supply chain management, quality control, and product development requirements.
We focus on the provision of a tailor-made solution based on your situation to meet your standards and requirements. Start your journey by reaching out today to discuss your product and learn how we can help.
What Is an OEM and How Do You Choose One?
Entrepreneurship lives in the American Spirit as surely as independence, as evidenced by the approximately 32.5 million small businesses across the nation. Yet, despite that independent, entrepreneurial spirit, business is a collaborative endeavor.
Let’s say you design a new product and want to take it to market. Unless you plan on manufacturing every single part in that product, you’ll rely on parts produced by others. When customers need replacement parts, where do they turn?
Both of these problems are solved by using an OEM or original equipment manufacturer. Not clear on what an OEM manufacturer is, does, or how to pick one? Keep reading for our breakdown of the OEM’s role and tips for selecting one.
What Is an OEM Manufacturer?
An original equipment manufacturer fills a specific niche in the world of goods production. They make parts that other companies use to finish their products.
Take electronics production as a case in point. Almost every piece of electronics and, these days, most electrical appliances use circuit boards. While the electronics company may design the circuit board, most of them rely on other companies that specialize in printed circuit board manufacturing to produce the actual boards.
You see similar cases in car manufacturing. Auto manufacturers buy parts like glass and radios in bulk and install those parts in their vehicles.
How Does OEM Manufacturing Work?
OEM manufacturing typically works in one of two ways. In the first case, the OEM manufacturer produces a part in bulk that lots of other companies use as designed.
For example, a ball bearing manufacturer might simply produce ball bearings in a set of specific sizes and materials. Businesses that need ball bearings will design their products around the available sizes and buy from that company. The ball bearing manufacturer is an OEM manufacturer because all of the other businesses use their products as is.
The other option is when a business works directly with a contract manufacturer. In those cases, the business typically needs a custom part that they can’t get elsewhere.
For example, a product might need a part with a specific level of precision. While similar parts might be on the market, they don’t meet that level of precision. The business will then work with the contract manufacturer to design and make the part to the right level of precision.
OEM vs. Aftermarket
You traditionally see OEM contrasted with aftermarket manufacturing. Aftermarket manufacturers make parts that work with a product but were not made by the OEM.
These parts often perform as well as OEM parts, but not always. In some cases, such as car parts, aftermarket parts are generally considered generic or cheap stand-ins for OEM parts.
Selecting an OEM
Selecting an OEM might look simple on the surface, but it’s a fairly complicated process for businesses. Let’s take a look at some of the biggest factors you need to keep in mind.
Experience
OEM manufacturers tend to specialize. For example, they may specialize in working with particular industries.
Let’s say that your business produces food preparation equipment for restaurants. A lot of food prep equipment is made from specific grades of stainless steel. Minimally, you want an OEM that works a lot with steel and, preferably, one that has experience with production equipment.
That experience on their part will save you a lot of headaches because you won’t need to walk them through why you’ve chosen a particular material for a part.
On the other hand, let’s say that you make toys. In that case, you probably want a company that deals a lot in plastic extrusion and has experience with toy production. In that case, as long as they understand safety requirements for toys, they can offer you recommendations about materials.
Customization Services
In many cases, one of the biggest factors is whether the OEM can offer customization services for your part. Most contract manufacturers will offer some level of customization, but the service may prove limited in some ways.
For example, they may only offer customization for certain kinds of materials or processes. You should do a little research and even contact the companies in advance to get a handle on what kind of customization services they offer.
Cost
Another factor you must keep in mind is the overall cost. Manufacturing is an expensive proposition, but it’s often substantially more expensive to do OEM manufacturing domestically. The labor and overhead costs for the OEM are just higher when they operate in the US as opposed to overseas.
You can often find OEM manufacturers in China that will cost you less, even when you add in the shipping costs. While part costs aren’t the only concern, they can make a real difference in your per-unit profits.
If you can get the parts made to your specification levels for less, it’s practical to do so.
Production Minimums
You must also keep an eye out for production minimums. Depending on the company, they may require that you order a certain number of the parts before they’ll even consider taking you on as a client.
For example, some companies might require a minimum order of 500 parts, while others might require a minimum order of 5,000. Given that setup is often the most expensive part of setting up a production run, these minimums make sense. Yet, the order size minimum for a company might prove higher than you need or want.
OEM and You
An OEM is often the best and only solution for businesses that need specific, customized parts. Of course, picking the OEM is often the bigger challenge.
You must consider many factors. Does the OEM have experience in your industry? What are the overall costs?
Does the OEM offer customization services that meet your needs? Will you meet the minimum order threshold for a company? When you need a part made just so, however, there is no replacement for a good OEM partner.
Shield Works specializes in OEM manufacturing. For more information about our services, contact Shield Works today.
Your Guide to OEM Products: What They Are and Their Benefits
Projections show that the global automotive OEM market will reach a value of $39.503 billion by 2028.
When it comes to aftermarket car parts, the general belief is that they may be lower in quality than factory originals. Your old air conditioner, for example, finally gives out after all of these years. The next day, you head into the dealership and purchase a factory replacement for optimal performance.
Auto parts aren’t the only thing produced by OEMs – in fact, they can create all kinds of components for various industries. So how do you decide between the two? Well, first you need to know about OEM products.
In this guide, we’ll go through what they are, why you should use them, and anything else you need to know.
OEM Products Defined
An OEM (original equipment manufacturer) is a company that makes parts that are considered to be as good as the components of products from another manufacturer. For example, a manufacturer that makes smartphone screens that are as good as the ones that come as standard in iPhones would be classed as an OEM.
OEMs generally work closely with VARs (value-added resellers) to add value to an original item, which the VAR then sells. An OEM may make custom designs based on the needs and specifications of a VAR.
How OEMs Work
An OEM typically makes sub-assembly parts, but will sometimes produce completed items (although this is rare). An OEM as above, that makes smartphone screens, may also make a range of other electrical components. They might then sell these on to a company like Samsung or Apple, which assemble these parts into TVs, smartphones, computer monitors, etc.
Many parts made by an OEM are quite insignificant on their own. Most final products are assembled from many individual parts before the VAR sells them under its own brand name.
As OEM product manufacturing consists of parts and components, they focus mainly on B2B (business-to-business) sales, whereas VARs sell primarily to end-users. With that being said, the number of OEMs selling directly to customers has increased in recent years.
This is mainly with certain types of products. OEMs that make computer components, for example, often sell directly to customers who build their own computers. Car part manufacturers often do the same as many people carry out car repairs and upgrades themselves.
Despite this, the auto industry contains one of the most basic OEM examples there is. OEMs manufacture parts like brake cylinders and exhaust systems, which they sell to auto manufacturers. These manufacturers then assemble these parts into cars, which they market to auto dealers, who sell them on to customers.
Newer OEMs
In recent years a new definition for OEMs has arisen, and it’s most commonly associated with the computer industry. It refers to a company that buys products, then rebrands them or incorporates them into new products under their own name.
Microsoft, for example, creates Windows software which it then sells to HP. HP incorporates this into its devices and sells them to customers under the HP brand.
In this situation, Microsoft would traditionally be the OEM, and HP would be the VAR. In most cases, however, the product guide from HP would refer to themselves as the OEM.
You do have the option, however, to go for aftermarket parts instead of OEM products. This is true for almost any component, and whenever you need to replace or upgrade anything, you need to choose which you think is best.
OEM vs Aftermarket
People often get OEM and aftermarket confused, but they’re almost opposites in some ways. OEM parts are made for specific products. Aftermarket parts are made by another company, and customers can use these as a replacement for the original parts.
There’s a lot of competition here in many industries. Among the most common is the auto parts industry.
If a consumer has a Ford Taurus, for example, and the thermostat breaks. They can replace it with an OEM part made by ABC Thermostats, which would be identical to the original one. Alternatively, various other companies make other parts that would serve well as a replacement – these are aftermarket parts.
In many situations, a consumer would go for an aftermarket part because it’s cheaper and/or easier to obtain. Sometimes it may be the only option. If the consumer is replacing a part from an older product, the manufacturer may no longer support it, meaning the OEM might not make the parts needed anymore.
Sometimes certain aftermarket product manufacturers become well known for the quality of the parts they produce. In these cases, consumers may specifically look for parts made by such an aftermarket manufacturer.
This is something else that is commonly seen in the auto parts industry. Hurst Performance, for example, is an aftermarket gear shifter manufacturer. They’re also an OEM manufacturer of some parts for various muscle car automakers.
Their products are generally seen as being superior to the parts that most cars come with as standard. Because of this, people will often choose them for replacement parts instead of going with OEM parts. People will sometimes upgrade to Hurst Performance gear shifters before their original even needs replacing.
The Benefits of OEM Products From Shield Works
When buying parts, you may need to decide what type of manufacturer to go with. Several advantages come with using an OEM.
Response
You’re likely to get a faster response from an OEM than other manufacturers. This is because they can identify and produce the part quicker as they have access to the technical drawings. At Shield Works we aim to always keep turnaround time to a minimum, ensuring we get your parts manufactured and out to you in good time.
Quality
With OEM parts, quality is key. We work to make sure our parts are identical to the original component, if not better. We test all parts we create to make sure they meet the specifications of the original, ensuring high quality and reliability.
Any parts you receive from us will be fully compatible with the product and perform just as the original part did. At Shield Works, we go by ISO standard work practices to ensure we maintain a high product standard. All of our processes and record-keeping also meet ISO standards, maintaining high-quality practices across all areas of our business.
Shield Works is a Wholly Foreign-Owned Enterprise (WFOE). As such we adhere to all PRC laws and regulations in terms of product manufacturing, assembly, distribution, and exportation.
Support
All OEM support engineers should have access to the engineering team that designed the original products. This means they’ll also have access to any information or details needed to ensure the part is up to standard. With a high level of technical knowledge and support, we can ensure that we make all of our parts correctly, with minimal room for error.
Value
OEM parts should always be as good as the original part. Because of this, you would expect them to have the same longevity. If a part serves the same function but fails much quicker, it may not be as worthwhile to replace it.
Any parts you get from an OEM manufacturer like Shield Works should last just as long under the same conditions as the parts they’re replacing. The performance will be just as good, and it will degrade at the same rate or slower.
One of the downsides of aftermarket parts is that they often don’t match up here. While they may work well enough for the same purpose, they’ll often fail much quicker. This is because they tend to be made with lower quality materials, and with worse manufacturing processes.
ROI
In most cases, an OEM manufacturer produces parts in a very cost-efficient manner. While aftermarket parts can also be very cheap, the lower level of quality means that they’ll need replacing more often, and they’re more likely to have defects from the start.
OEM parts are specifically designed to exact specifications to match your equipment. In the long run, this will keep the need for maintenance down, helping save on costs. It also means you’ll experience less downtime, further increasing the ROI (return on investment).
Costs
Shield Works is based in Guangdong, China. The cost of product manufacturing varies depending on the country in question. In China, manufacturing costs are often much lower than in many other locations.
By saving costs on manufacturing, we can offer our OEM parts at a lower price than many competitors, without compromising the quality.
While all manufacturing takes place in China, Shield Works is 100% British owned and managed. This means that we maintain western standards for communication, service, and business ethics at all levels of our organization.
Transparency
People may have concerns about products being manufactured so far away from a business’ main center of operations. To ensure all standards are held we maintain 24/7 video streams from our warehouse in Guangdong. Using this you can observe your manufacturing area at any time to ensure proper practices are being adhered to.
Security
One of the best ways of ensuring standards are maintained is to only allow authorized personnel into manufacturing zones. To do this, we use fingerprint access which helps provide full IP (intellectual property) protection at the manufacturing location.
Access
While a 24/7 video feed is useful for monitoring a manufacturing zone, it doesn’t give a good look at the parts themselves, so you may want a better idea of how everything is being handled. We’ll give you full access to production monitoring in real-time. This way you can get details from your assembly line whenever you need them.
You can look at information such as communication lines and statistical reporting to ensure things are on track. This also means you can communicate directly with your production team in China if need be.
Flexibility
You can contact us at any time if there are any changes you need to make. Within our OEM manufacturing processes, we can make any adjustments to ensure your orders meet your needs. If you have any product adjustments you need to make or project requirements that we’re not aware of, just let us know and we’ll make the necessary changes.
Experience
Shield Works, with already over 17 years under its belt now, was launched the core values of transparency and integrity. We still carry these principles on today, and they’ve been a key component of our success in the manufacturing industry.
Since being founded we’ve completed over 15,000 projects. Our team is skilled in a variety of processes and sectors.
Capabilities
Over the years our team has tackled all kinds of projects. We can produce a range of hard goods, soft goods, and electronics such as:
- Furniture
- Tools and hardware products
- Automotive parts
- Safety equipment
- Jewelry
- Footwear
- Bags and accessories
- Home and garden appliances
- Lighting
- More
Whatever OEM parts you need, we can manufacture them professionally and in good time.
Getting Your OEM Products
OEM products are ideal if you want high-quality parts for your goods. The products we manufacture at Shield Works will always meet or exceed expectations, making them ideal for any situation.
We pride ourselves on transparency, so you’ll be able to see what’s happening with your parts at any stage of the process. We have a wide range of capabilities and can meet whatever needs and specifications you have. OEM parts provide quality, reliability, and longevity.
The team at Shield Works Precision Manufacturing is ready to take on any project you have. If you want to know more about our services, or if have any other questions for us, contact us today.
Manufacturing in China: 5 Facts You Should Know
Though it seems like a lot of overseas companies outsource their production to China, there are plenty of misconceptions about Chinese manufacturing that can come back to haunt you.
Before you set out to reach a manufacturing partner in China, there are some facts you should know so you can prepare yourself for success instead of falling into the pitfalls. Let’s dive in.
1. Manufacturer VS. Supplier
If you’re looking to get your product made in China, you’ve probably already heard the terms “manufacturer” and “supplier” thrown around a lot.
They seem to be the same thing, right?
Yes, but also no!
Though the two words are closely related, they are not always meaning the same person in the manufacturing industry.
Generally speaking, a manufacturer would be considered more of an in-house entity that operates as your micro-factory with all the machinery and workers required to create your product from start to finish.
Suppliers are those who supply goods or services; but they can sometimes also act as manufacturers, wholesalers, or distributors who purchase existing brands and products (usually from somewhere else).
It’s imperative to make sure that you understand the difference between “manufacturer” and “supplier” and figure out what kind of services they can provide for your business.
If you’re a newcomer to the market, make sure to work with someone who doesn’t take advantage of inexperienced clients.
Before signing any contract or making any upfront payment, it is important to know if your manufacturing partner is qualified for what they produce and has an official business license to run a company in China.
2. Manufacturing Costs Vary Across Different Cities
Though you may think that manufacturing costs in China are lower than that of western countries, the prices in manufacturing among Chinese cities differ significantly.
One of the reasons for this is that China has undergone enormous changes and development in recent decades. This explains why the average monthly salary differs between cities or regions.
In this case, you may find out that some cities display relatively stable manufacturing cost patterns while some raise their manufacturing service fee due to the increment in labor costs and land prices.
The other main reason is that China is paying great attention to improving its high-end manufacturing capabilities. Now, more and more high-tech manufacturing factories are well-established to pursue productivity and lower costs.
3. Finding the Right Manufacturer in Your Area
Locating for a manufacturing company that produces what you need is easy unless you confirm everything you need beforehand.
The main thing you should know is that many manufacturers usually stick to one specific type of product.
For example, it may be hard to find someone who can make “home appliances“ but it’s easier to reach a blender manufacturer who specializes in this field for years.
See the difference?
So when reaching a potential manufacturer in China, keep in mind to find someone who has experience and expertise in your product area. Otherwise, it will end up costing you even more than if you do the job yourself.
4. Don’t Skip Quality Control
Product quality is a major factor for western businesses because defective products can lead to financial losses as well as angry customers who will complain about your company sending them an unsatisfied product.
When outsourcing your production to China, it isn’t enough just to send your idea or design to a factory and expect them to produce the item correctly – even though you deeply trust them.
Make sure you’re thoroughly involved in each step of production and conduct quality control so that you can be confident that the manufacturer is capable to deliver products that meet your expectations and the quality standards.
5. Delivery Delays Can Be Normal
Manufacturers often negotiate with multiple foreign companies at once, so there’s no guarantee they will give you their full attention or work quickly enough to meet your deadlines.
Make sure your manufacturer gives you a detailed production plan so you have an idea of how long it will take to produce your items.
Another factor worth considering is how long it will take for the items to arrive once they are shipped.
The delivery time can vary depending on where the factory is located, where you want to receive the product, and even if there are any Covid cases in the region
So you have to remain realistic about the lead time and deadline. Keep communicating with your manufacturing partner so you can receive an update on your production process.
The Solution For Your Manufacturing Project
If you haven’t yet worked with a manufacturer in China, you have to list your needs and expectations before making a final decision.
Also, never choose the one who offers the lowest price, work with those who have long-term experience and know how to help your business.
Shield Works can be your best manufacturing partner. With our British ownership and management background, we take pride in our over 17 years of international project experience and excellent team. Contact us for a no-cost consultation!
Reasons the China Manufacturing Boom Is Actually Good
China produces over 28% of the world’s manufacturing. Because of the China manufacturing boom, it’s not surprising that China’s gotten the nickname “the world’s factory.”
But why is there an increase in China manufacturing? How can it benefit your business? And how has the COVID-19 pandemic affected global relations?
Read this guide to find out everything you want to know about the China manufacturing market and why it’s actually good for your business.
What’s Driving the China Manufacturing Boom?
There are several factors that contribute to the boom in China manufacturing.
For most people, the lower cost of labor is probably the first factor they’d consider. There are lower wages in China. This makes manufacturing much cheaper.
China is the most populous country in the world. This means there are more workers than jobs. That keeps the cost of labor relatively low.
However, certain provinces have begun enacting more laws to protect workers. This includes installing minimum wages throughout the country.
Manufacturing is still cheaper when outsourced to Chinese factories. But, the cost of production isn’t the only consideration you should take into account.
The Chinese-U.S. Business Ecosystem
Manufacturing isn’t the only part of industrial production one must consider. In fact, there is a large network to consider that includes:
- Suppliers
- Distributors
- Government agencies
- Customers
American companies such as Apple utilize China’s efficient supply chain. This efficiency helps them to keep costs down and margins high.
Most U.S. companies operating in China find it unrealistic economically to complete productions on U.S. soil.
Additionally, business relations remain strong between the U.S. and China. Though political tensions may be high, many businesses feel confident in their Chinese manufacturing relationships.
In fact, this is the most confidence many businesses have felt since the beginning of the COVID-19 pandemic.
Lower Compliance Standards
Product assembly in China does not have to meet certain guidelines American businesses must follow. For example, China is much more relaxed about the following standards:
- Involuntary and child labor
- Health and Safety Guidelines
- Wage laws
- Environmental protection laws
Though labor laws are changing in China, they are still far less strict than in the United States. This helps to save on labor costs.
Chinese factories also save on waste management. This is because environmental protection laws are not strictly enforced.
Savings on Taxes and Duties
In 1985, China enacted the export tax rebate policy. This policy abolished double taxation on exported goods. This was responsible for making Chinese manufacturing much more attractive to potential investors.
Exported goods in China are subject to 0% value-added tax (VAT). That means these products are exempt from VATs.
Chinese products are also exempt from import taxes. This keeps production costs low, which attracts more investors.
International Expansion
China is a massive pillar in the Asian market. The Asian market in general is growing at an extremely rapid rate.
Doing business in China helps to expand your reach to these valuable Asian markets.
These expansions can multiply your company’s business opportunities exponentially. You also streamline your ability to introduce products into markets across Asia, especially Chinese markets.
How Did COVID-19 Affect Chinese Manufacturing?
It’s no surprise that the COVID-19 pandemic affected the boom of Chinese manufacturing. China was, after all, the first country to experience the effects of the pandemic.
It is common practice for Chinese businesses to take a week off for Lunar New Year celebrations. In 2020, this break was extended. This was China’s attempt to stop the spread of COVID.
Unfortunately, like many American businesses, Chinese businesses experienced delays in production. Many workers became sick, slowing down manufacturing.
Additionally, issues in the global supply chain created fear around reliance on outsourced manufacturing. This included Chinese manufacturing.
Chinese Recovery in a Post-COVID Economy
However, Chinese factories continued on. Many of them capitalized on mask production to keep them operating throughout COVID.
Now, it appears that China’s manufacturing is on the come-up. However, since the roughest days of the pandemic, it would appear China has made a full recovery.
How Did the US-China Trade War Affect Chinese Manufacturing?
While in office, US President Donald Trump attempted to decouple the Chinese and US economies. This created a trade war that affected, and still affects, the manufacturing industry.
However, an annual member survey by the American Chamber of Commerce in Shanghai revealed that 92.1% of its members had no plans to leave China.
Even with Trump’s push, leaving Chinese manufacturing was not an attractive prospect to many companies. Most of these companies have revenues above $500 million USD.
How Is China Upgrading Its Manufacturing Industry?
The Chinese government’s goal is to have 30% of its gross domestic product (GDP) come from new industries. So what are they doing to meet this goal?
By 2025, China plans to have strong innovation in its manufacturing industry. They expect to use these innovations to drive high-quality growth.
Some manufacturing innovations China is currently working on include:
- Sharing production facilities
- Sharing tools and equipment amongst facilities
- Making intellectual resources such as designs and development practices public use
Their goal is to use this plan to boost resource allocation. This will help to improve efficiency and drive higher ROIs for business manufacturing in China.
Take Advantage of the Chinese Manufacturing Boom
So, you can see how Chinese manufacturing is a valuable market for American businesses.
The factors driving the China manufacturing boom can help to lower costs and boost your ROIs so that your business sees significant returns. Plus, you can streamline your business for introduction into the up-and-coming Asian markets.
Contact our team if you’re ready to begin manufacturing in China. With Shield Works, you can rest easy knowing you’re making the right choice for your business’s manufacturing needs.
The Future of OEM Manufacturing
COVID-19 affected many people’s lives physically, mentally, emotionally, and financially. This also affected several different businesses, causing them to halt their production. Fortunately, even though the pandemic still lingers, there are many OEM manufacturing companies that can still meet the demands and needs of many customers.
If you’ve ever considered working with an OEM manufacturing company, but you aren’t sure how that relationship will look due to the market’s changing trends, you aren’t alone. Many different companies are turning to OEMs to help with their production needs to keep up with product quality demands. If you want to learn more about OEM companies and how they can benefit your company in today’s changing landscape, continue reading below.
What Is OEM?
An Original Equipment Manufacturer, also known as OEM, is a company that produces and sells parts of a product or products for a particular company. That company then takes those parts of a product or complete product and sells it to their clients. OEMs commonly operate in the computer and auto industries.
An original equipment manufacturer often works directly with a retail company. For example, Lenovo’s computer parts aren’t all manufactured by Lenovo themselves. Instead, Lenovo utilizes a manufacturing company to create their processors.
Examples of OEM
To better explain how an original equipment manufacturer works, let’s use Company D as an example. Company D manufacturers several different versions of a memory card to sell to various computer manufacturers or retailers, like Lenovo or Dell. Those companies are considered value-added resellers who will sell their version of the product to their clients.
OEM vs. Value-Added Reseller
Value-added resellers, also known as VARs, sell products from the OEM, but they also incorporate certain added features before doing so. The two companies benefit from one another because VARs help original equipment manufacturers sell their products.
OEM vs. Aftermarket
While an OEM produces original equipment, an aftermarket manufacturer creates products that are made to look like and work with those of an OEM. To simplify, aftermarket parts or products are not original because different companies manufacture them.
Some of these aftermarket companies are locally based, whereas others are foreign-based. Although these parts are cheaper, they don’t have the same guarantees that an OEM part or product would.
How to Make Aftermarket Parts
As we all know, as time passes and technology advances, well-known auto companies, and technology companies release updated versions of their products. Most auto companies update their vehicles at least once every six years, and phone manufacturing companies change almost every year or two. So what happens to those old models and machines used to create those products?
These companies sell them. Many manufacturers purchase those old molds and models to create similar products to market.
Example of Aftermarket Products
You commonly see aftermarket parts in the auto industry. Auto shops and insurance companies prefer to use aftermarket parts over OEM parts whenever someone gets into an auto accident and needs their vehicle fixed. This is because aftermarket products are cheaper to manufacture and purchase.
Characteristics of an OEM
If you want to know if a company is an original equipment manufacturer, there are a few characteristics to look out for. For example, OEMs sell licenses which means they typically sell their product licenses to the resellers they market to.
Hardware
You can easily purchase hardware off the internet through an OEM or a retail product manufacturer. However, the OEM hardware typically is shipped without cables or adapters necessary for the installation and operation of said hardware.
Software
OEM software isn’t very common, but there are OEM software products. Some of the OEM software products created are versions of Windows productivity software, operating system, and security applications. This licensed software typically does not come with technical support, but it is instead provided with basic documentation and a few logos.
Most of these products are created for specific machines. For example, an OEM Windows system for an HP computer won’t operate the same on Dell or Lenovo. Even more so, that certain software may work for one specific HP model, but it won’t perform the same on other models.
Benefits of Original Equipment Manufacturers
There are several different benefits of using an OEM manufacturers in china. For example, when working with an OEM, you can expect a quick response time because less time is required to identify and produce the parts you need. Most manufacturers you work with like to have their products assembled and sent to you within a timely manner.
Quality
When replacing a part on a machine or a vehicle, you will want to have the utmost confidence that the replacement part is the same, if not better, than what was there before. The only way to secure this confidence is to use an OEM. When using an OEM manufacturing company, they will ensure that your products or parts of a product are created and tested to match your original specification.
Support
When approaching OEM support engineers, you will want to be reassured that those engineers have access to the same engineering team that designed your products or parts. Most, if not all, OEM support engineers do have that access, which will provide you with a wide variety of engineering and technical support. OEM staff members are pretty knowledgeable, and they can help you with all your part needs.
Value and Lifespan
When replacing parts in your products or machines, you expect that you will continue to get the same performance you had before needing the replacement. Buying from an OEM manufacturing company ensures that your replacement part will have that same quality, and there will be no degradation in performance.
Warranty
Having a warranty is one of the most important benefits when working with any OEM manufacturer. Should your company receive your parts with any defects, or if the parts are faulty, you can always reach out to your OEM. They will make sure to make it right so that you aren’t stuck with unusable products.
High Return on Investments
Since the parts your OEM supplies are designed to perform and fit factory specifications, these parts increase the life of your product. In the long run, this can save your business a lot of money and help reduce downtime.
Current OEM Trends
The relationship between OEM companies, dealerships, and other companies has always been healthy and symbiotic. Most OEMs depend on their networks to sell and service their products.
On the other hand, these companies have fallen back on OEMs to provide specific components or parts. In the auto industry, original equipment manufacturers also have the task of financing their servicing activities while the cars are covered under warranty.
Updates to the Market
Most OEM companies are now working towards creating remote software upgrades and establishing direct relationships with their clients with subscription models. With that said, this means that OEMs are taking ownership of customer relations which usually falls back on the dealers, or as you now know, VARs.
The dealers still get a significant portion of profits from after-sales and services. Activities like new car sales or new product sales can also create a profit, but the margin is relatively small.
What Does This Changing Landscape Mean?
Consumer demands of the auto industry are changing. Apart from the shift in needing or wanting more electric vehicles, cars are now viewed as a part of a shared mobility service. Models of car ownership are changing as well, meaning that customers now view their cars like smartphones. These clients expect their vehicles to be updated and refuse to pay a premium for a service that offers benefits down the line.
OEMs are currently working on creating capabilities that reduce cost due to connected diagnostics, predictive maintenance, and over-the-air software updates. They are also seizing more opportunities for direct relationships with consumers, such as creating innovative techniques to sell cars.
Customer Trends and the Marketplace
As technology continues to advance and the way we work and live continues to change, customers are doing things more online. To support dealerships, OEM manufacturing companies have to consider the value they add.
As mentioned earlier, OEMs are set to take greater ownership of customer relationships, but they should provide additional support to dealerships to ensure they don’t just disappear altogether.
To help with this, OEMs can incentivize dealerships to drive traffic to online showrooms, or they can reward dealerships for high brand engagement.
How to Find an OEM Manufacturer
When looking for an OEM, you will want to ensure that they have experience making products similar to yours. For example, an OEM who specializes in computer parts may not have the same capabilities for creating auto parts. You also must consider if you want to use a factory in the United States or overseas. Most OEMs who have better capabilities are overseas, not in the United States.
Domestic vs. Overseas
Manufacturing in the United States has its benefits, but it also comes with a few disadvantages. With an OEM in the U.S., you have more control over production; you can also visit the site regularly and avoid dealing with international shipping logistics.
Although that may sound ideal, you will most likely have to pay more for parts and labor. With overseas manufacturing, you still have a say in your product specification, but the cost to the manufacturer is much cheaper.
Even though dealing with international shipping logistics may sound like a headache, it won’t be when you partner with the right company. They will make sure to have a dedicated contact who can speak your language and explain the entire process to you.
Review Their Certifications
Not all manufacturers in China are the same, nor do they have the same qualifications. No matter how well-established the plant is, there is a possibility that they don’t have the necessary licenses or certifications.
To ensure that your manufacturer creates your product in compliance with regulatory standards, make sure that your supplier has the proper licenses and certifications to assemble your product.
Common ISO certifications manufacturers should have:
- ISO 14001: Environmental Management
- ISO 9001:2015: Quality Management Systems
- ISO 45001:2015: Occupational Health and Safety
Each industry has its own certifications, so each manufacturer needs to have the same certificates and documents to ensure they produce high-quality products. Before working with a specific manufacturer, make sure that you check the required materials for assembling.
Capacity
The last thing you want is to work with a manufacturer who doesn’t have the capacity to manufacture your parts or products. You wouldn’t want to send your money and products to a company just for your products to be stuck on a shelf awaiting their assembly.
To ensure that you don’t get stuck with a company that doesn’t assemble or manufacture your products as fast as you need, make sure you check in with your manufacturer’s production space. The OEM should provide you with information about their current output rate and deadlines.
Produce High-Quality Products
Partnering with a reputable OEM manufacturing company is critical to make sure that your business meets the demands of your clients and ensures long-lasting performance and high-quality products. Working with a reputable OEM manufacturing company is more than just finding someone reputable and knowledgeable; it is about creating a stable relationship.
You want to make sure that the company you work with values you and your business just as you do. Contact us now if you are ready to create a lasting relationship with an OEM manufacturing company overseas. Our team is prepared to answer any questions or concerns you have about our future partnership.
How to Choose the Right OEM Manufacturers in China
Do you have a new product that you want to sell for your company, but you are unsure what type of manufacturer to use? Have you decided to use a manufacturer in China, but you aren’t sure what type of manufacturers are available? Most people don’t know that there are OEM manufacturers in China in addition to ODM manufacturers.
So what is the difference between the two? We will give you a hint; one provides more protection and more specification help than the other. They are both excellent options to bring your products to the market, but you should be aware of a few other key differences. This brief manufacturing guide will cover the difference between the two and who you can contact for more information.
What is OEM Manufacturing?
Before we get into what OEM Manufacturing is, we must first define what OEM is. OEM stands for Original Equipment Manufacturing, and it is a form of outsourced manufacturing. OEM factories have the capabilities to manufacture products according to your unique specifications and designs.
Before an OEM manufacturer can produce your product, you must complete your research and development. This includes engineering, market research, and design.
Once you have all the components of your product down in writing, you can then reach out to an OEM manufacturer to create your products in bulk. The original equipment manufacturer will set up the production of your product to make sure that they can produce the product on time, on quality, at your designated budget.
Advantages of OEM Manufacturing
One of the most significant advantages of OEM is the fact that you have complete control over your intellectual property. This is a huge deal, especially if you have a breakthrough project and you choose to ship your production services overseas.
When you control the research and development of your product, you have complete control over your intellectual property. This gives you better bargaining position and makes it easier to switch to another supplier if you need to. Even though you have full control of your intellectual property, it is best to protect it at all costs.
Specialized Technology
If you don’t have the right expertise or equipment to create certain parts of your product, you can depend on your OEM to have it for you. It is best to take advantage of the technology offered by your OEM manufacturer to complete your project. Access to this type of technology and expertise ensures that the manufacturer will create your product with top-tier quality.
Cost-Effective
When you partner with OEM manufacturers in China, they can streamline the process of creating your product in large volumes. China is also well known for its efficient supply chains, making it cheaper to produce your product. This provides your business with higher profit margins, more revenue, and increased sales.
Disadvantages of OEM Manufacturing
One main disadvantage of using OEM manufacturing is a limited selection of suppliers for certain specialized items. Most OEM manufacturing companies prefer to work with businesses that create a lot of demand, so if you don’t sell your goods fast, they most likely won’t work with you.
Risk of Infringement
Because you are sending your items to a company to create your product, there is a risk of infringement. It is important to note that every country has its own rules and regulations for intellectual property. If you aren’t diligent in protecting your product, you risk someone selling your components to your top competitors.
No Troubleshooting
Once you have your specifications down and send it over to the manufacturer, they will create your product based on what you send. This means that they won’t troubleshoot or correct any faulty designs as they produce your items. They will only manufacture based on what they have from you.
What is ODM?
Original Design Manufacturing, also known as ODM, is another form of manufacturing. Unlike OEMs, ODMs provide product development services, and depending on the company; they can help you with the entire product lifecycle. The exact scope of what an original design manufacturing company can do differs from company to company.
Let’s say that your company has an excellent idea for a gaming console. You did your market research and found an opportunity to create a low-priced gaming console of decent quality in China.
You and your team will need to develop some features you want the console to have, but you don’t necessarily have any specifications or technical drawings. If you want a gaming system that meets your requirements, you can reach out to an ODM to fulfill what you need.
Your ODM company can help you create specifications and new designs based on your idea. The ODM may already have its own product lines that you can customize if you would like.
Advantages of ODM
One significant advantage of using original design manufacturing companies is that you don’t have to make substantial upfront investments. You won’t have to pay for any tooling; the ODM will take care of that.
Technical Resources
With an ODM, you don’t need technical resources that provide detailed specifications and designs. Instead, the ODM will handle all of that for you. Many Amazon FBA sellers prefer to use ODMs to create and sell their products quickly.
Quick Turnaround
ODM companies don’t worry about testing, developing, or researching a product. They usually have already created products that they can rebrand for your business. To ensure you don’t run into issues with another company claiming that you copied their idea, the ODM will handle making sure the product uniquely links to your company.
Least Expensive Manufacturing Route
Testing and designing a product takes a lot of time and requires a decent amount of capital. When you partner with an ODM manufacturer, you have the opportunity to save money while you focus on the core aspect of your business.
Reliable Products
Depending on your product, certification is typically required before your product can hit the market. To ensure that your product meets quality requirements, ODM manufacturers will handle all quality testing and inspections. They will also get the proper product certificates you need before selling your product.
Disadvantages of ODM
Although these manufacturers provide you with a quick and easy way to create a product for your business, working with them can make it harder to stand out from the competition. Your manufacturer will sell the exact product you create to other companies with minor alterations.
Even if you manage to make significant sales volumes, your ODM most likely won’t honor your changes if your customers request customizations or upgrades. Most manufacturers don’t develop new products, especially if a specific product requires a full or a partial redesign.
No Intellectual Property Rights
Because your manufacturer designed, tested, and developed these products, they own the item’s intellectual properties. This means that you have no control over the ODM’s legal decisions about the product.
You also have no control over who the supplier sells the item to. There is a chance they could sell your product to another competitor.
There is also a chance that the item you buy from your ODM could be another company’s intellectual property. If you are unaware of this and you sell your product on the market, you’re at a risk of facing a lawsuit.
How to Find an OEM or ODM Manufacturer in China
Choosing an OEM manufacturer in China can be an overwhelming experience. There are hundreds, if not thousands, of manufacturers in China who can help bring your product to life.
The best way to find the proper manufacturer for you is to look up some and make a list of those you like best. There are certain companies that have high-quality components, quick turnarounds, and high customer service ratings.
Shortlist Your Companies
Once you have a list of companies you may want to work with, it would be best to shortlist them. Look over each company’s length of time in business and see if they specialize in the component you need.
Other essential details to look over:
- Certifications the company has for their production capability
- Business licenses
- If the company has already exported products to the United States
- Their minimum order quantity (MOQ)
If you like a company but have questions about its qualifications, check out its reviews. Most previous clients will rate the company and put what they did or did not like about them. The best way to find out if they have what you need is to contact them.
Review Their Credentials
Even if a company tells you that they have the right qualifications, it is better to verify those credentials to ensure that they are actually a legitimate company and not a middleman. There are many ways to verify this information.
For one, you can ask the company for their audited accounts, ask for product samples, or you can check their Value Added Tax Invoice. You can also ask for the Chinese name of the factory, the location of the factory, and the local government office assigned to the factory. The government office should have a copy of the factory’s registration and license records which you can use to verify their details.
Workplace Rights
Unlike the United States, there are many countries that do not have protocols in place to protect their workers. This means that some workers may not receive adequate breaks or time to get food. Some of these people work for more than eight to twelve hours a day without reasonable pay.
When sourcing the proper manufacturer for your company, make sure that you work with an ethical company. The last thing you want to do is partner with a company that does not care about its employees. Don’t spare efforts on researching their track records.
Hiring a Sourcing Agent
The most significant advantage of hiring a sourcing agent is that they can verify and identify different manufacturers on your behalf. These people have extensive networks of partners and in-depth knowledge of the sourcing market.
There are many companies that have sourcing agents on staff who can serve as the liaison between you and their manufacturer. They are able to speak to you in your native language while being able to translate for their company.
Visit the Manufacturers
If you aren’t able to visit the manufacturers yourself, you can use a sourcing agent to do that on your behalf. If you can take a trip out to China, you should go to check out the different available manufacturers.
When you go in person, you can see the facility first-hand and meet with key personnel at the manufacturing facility. While you are there, you can better explain the specifications of your product and if they can handle that for you. Visiting in person also lets the manufacturer know that you are serious about working with them to create your product.
Build Your Product With Confidence
There are many different ODM and OEM manufacturers in China that can bring your ideas to life, but which of the two is the better option for you? Choosing the proper manufacturer for your business needs shouldn’t be a complicated process, and that is what we are here for.
If you need help deciding between the two or if you are set on working with an OEM manufacturer in China, contact us now. Our team is fully prepared to answer any questions or concerns you have about our process!
Supply Chain Networks: Why Does Manufacturing in China Still Work?
Whether you’re outsourcing your production to China or not, there is no denying that manufacturing in China is one of the best options for many overseas companies.
China has maintained its position as the world’s largest manufacturing hub for the past 12 consecutive years.
There are many reasons why manufacturing in China still works.
Let’s dig a little deeper into why.
Does China Still Have Cost Advantages?
In the past decades, we have witnessed the rapid growth of China’s development. Most believed that it was the cost advantage and human resources that made China succeed.
Maybe it was, but things have changed.
Nowadays, China’s average labor costs aren’t low compared to many southeast Asian nations, such as Vietnam, Malaysia and the Philippines. The wages of skilled workers and high-teach talents grow fairly fast. Also, the average land prices are rapidly rising.
Therefore, there are many concerns that overseas companies tend to move their production to lower-cost countries since labor costs and land prices are getting higher in China.
However, it’s reported that foreign direct investment (FDI) topped 1 trillion RMB in 2021. It’s pretty clear that the comprehensive strength of China as a manufacturing superpower shouldn’t be neglected.
The answer is that China’s supply chain system is far more advanced than any other in the world.
Products Sold Worldwide Are Manufactured In China
You may have heard that in China, there are some small cities or even small towns
that are inconspicuous making world-class manufacturing contributions.
For example, Huludao, a coastal city in the Northeast China’s Liaoning province, is producing 25% of swimsuits in the global market. Since 2011, Huludao has been hosting an international beach-swimwear culture expo to expand its businesses and brands internationally.
In Yucheng County, located in Henan Province, more than 1,200 measuring tape making companies whose combined annual output exceeds 1.5 billion steel measuring tapes, accounting for 85% in China and 60% around the world.
So, you may wonder how such industries without high technology or difficult designs find their business opportunities.
By relying on China’s supply chain system, manufacturing in China will be more efficient, helping many businesses from home and abroad are able to gain their footholds.
The Problem Between Efficiency & Flexibility
Simply put, imagine that you want to outsource your production to a factory in China, there is no doubt that you will choose a high-efficiency factory to work with.
But keep in mind that only by being more specialized can a factory improve efficiency. In this case, it’s not hard to imagine this factory will be locked in certain product lines.
In this case, if you want something to be changed quickly, this factory will not be able to satisfy your needs and maybe you will turn to someone new. So, you also want the factory to be flexible. But flexibility is an obstacle to becoming a specialization.
Now you can see that keeping high efficiency and flexibility may not be compatible at the same time in a normal factory.
How Do Supply Chain Networks Work?
However, things will be much different if there is a powerful supply chain network.
Now there are tons of small and medium businesses (aka SMBs) that are ready to produce only some basic parts. And these SEBs are specialized in their field. Only in this way can these factories improve their efficiency without sacrificing much time and resources. Each SMB produces the basic elements, and every part can be easily assembled in another factory.
Then, all the SMBs get connected to be a wide supply chain network, solving the flexibility problem. In the end, these SMBs in the towns or the cities make themselves the certain type of manufacturing clusters.
It’s like Lego construction. Different factories produce different specific shapes of blocks with high efficiency. When you need some certain shape of blocks, you can purchase whatever you need and get them assembled, building your products.
The supply chain network connects businesses, making it easier for you to gather information and build your enterprise.
More importantly, the whole network nurtures an ability to control costs, which makes it hard for lower labor costs and land prices hard to contend with.
Let Shield Works Be Your Custom Manufacturing Partner
If are moving your production to China and looking for a reliable manufacturing partner, look no further. We are glad to help.
Shield Works is a British owned and managed company providing customized OEM manufacturing and assembly activities. Contact us to discuss your project today.
5 Tips for Original Equipment Manufacturing
Original Equipment Manufacturing (OEM) refers to the production of equipment made to the specifications of another company or manufacturer. This business model has been applied by companies around the world and is very common in China’s manufacturing industry, due to its extremely competitive market and high-quality products at reasonable prices. However, there are several key factors that are unique to the OEM model that you must be aware of before beginning your venture into China’s Original Equipment Manufacturing market.
Original Equipment Manufacturer (OEM)
If you are new to importing and plan to start your own business, then Original Equipment Manufacturer (OEM) is a good place to start. OEM refers to products produced by other companies that are rebranded or sold under another company’s name. For example, if you own a clothing line, you could consider approaching different apparel companies and getting their apparels made with your branding on them and then sell them yourself. When looking at starting an OEM business it’s important that all parties understand what is expected of each other and how everything will work together in order to make sure it ends up as a positive experience for everyone involved.
Finding a Good Supplier
Finding a good supplier is probably one of your biggest challenges. There are literally thousands of manufacturers and suppliers out there, each with its own website, reputation, capabilities and pricing. The problem is that you can’t get to know every single one, even if you try. So what do you do? Find an original equipment manufacturer (OEM) with whom you can work long-term. This way, once your first orders start rolling in, they’ll be able to follow up on it without ever bothering you. Just make sure they’re easy to contact by email or the chat app everyone uses there, WeChat, to be specific—you’ll need them to be responsive because customer satisfaction is key when things go wrong or when there’s something that needs fixing or changing on the spot.
Factories vs. OEMs
While it’s important to understand how both factories and OEMs operate, each has its own purpose. Factories will typically manufacture products to order based on a minimum order quantity (MOQ). That is, they will produce your product based on however many pieces you purchase; with that said, there is no guarantee of quality. OEMs (Original Equipment Manufacturers) are different because they have a brand or intellectual property that gives them more autonomy over their manufacturing decisions; as such, OEMS will have stringent processes in place for ensuring quality control. With that said, choosing between factories and OEMs can come down to where your manufacturing budget aligns best with your business goals.
Outsourcing is never simple
Researching, scouting, and getting to know potential manufacturers and vendors is time-consuming. And when it comes time to find someone you can trust, it’s difficult to know where to start. At last year’s CES technology trade show in Las Vegas, there was a firm presented as a go-to manufacturer of devices that look like iPads but cost far less. But when we investigated further, we found that almost everything about them was false—they weren’t made by Apple; they didn’t even look like real iPads. The products were unlicensed knockoffs sold through some big retail chains in the US—which said nothing about them being fake or inexpensive.
Dealing with hiccups
A manufacturing hiccup can be anything from an underperforming supplier to a supply chain delay, but it can severely disrupt your production schedule. What do you do if there’s some kind of snag? Your first step is to identify what exactly has gone wrong. If you need help, ask questions and get as much information as possible so that you can resolve it quickly. Ask yourself: What is your problem really? Is there just one issue or several issues adding up? Is it something that you can solve on your own or is it something that needs additional resources and support? Next, figure out how important solving this problem right now really is—and decide what resources are required to get things back on track.
It’s a common misconception that manufacturing in China is expensive. In fact, it’s quite affordable, especially when you compare it to labor and material costs in other developed countries. But we understand your concerns regarding culture, communication and IP protection, as we, C2W, are a one-stop manufacturing solution provider founded and managed by British and based in China, with our own production facility and in-house bilingual engineers. If you are interested in getting to know more about how we can be of help with your product manufacturing while protecting your IP, please feel free to contact us.
Outsourced OEM Production: Is It Always the Best Choice?
If you’re the OEM (original equipment manufacturer) of a design spec, then production is one of your most important considerations. Unfortunately, many companies stumble when it decides to make their OEM products in-house or through outsourcing. In most cases, outsourced OEM products are cheaper and quicker.
But, is this always the best course of action? In this article, we’ll explore whether or not outsourcing your OEM production is the best course of action. Let’s get started!
Outsourced OEM Production
Outsourcing your OEM production involves allowing another manufacturer to produce your product. You keep all the trademarks and intellectual property, but another company does the production.
Most often, this is done with multinational suppliers. Consulting companies with expertise in finding manufacturers will usually help you get in touch with the right company. Let’s take a look at some of the pros and cons involved in this method.
Advantages
The biggest advantage that comes with OEM production is cost. Since the outsourcing company is creating your product in bulk, you typically end up saving money on production costs. What’s more, the final product is generally of superior quality. As long as you have strict testing standards, then the outsource OEM firm should be able to meet them if they’re competent.
Many outsourced OEM companies also have specialized technology that allows them to create components you wouldn’t be able to create on your own. In the past, OEM production typically only worked for larger companies. However, this is beginning to change. Smaller companies with excellent design skills can take advantage of this type of outsourcing.
It allows them to avoid dealing with factory floor production skills, which take a lot of energy and money to manage. Instead, they can focus on more design and promotion while allowing a skilled workforce to handle the production.
Disadvantages
Unfortunately, there are some downsides to outsourcing your OEM productions. For one thing, you’re at the mercy of your supplier when it comes to quality control. As such, you’re responsible for any problems that might occur at the end of the day. Furthermore, you may have difficulty finding an OEM production firm that’s willing to take you on.
These companies generally only like dealing with clients that create a lot of demand. As such, smaller companies may have a difficult time finding multinational production firms, especially if their products are hard to make.
Finally, if you don’t go with a company that you’re sure of, then you may be at risk of property theft. This occurs when a manufacturer infringes or steals your intellectual property right. It occurs enough in the business, that you should inquire what the company is doing to fight against it.
In-House OEM Production
In-house production put vertical integration ahead of scale and affordability. Typically, in-house OEM production worked best for smaller companies. However, that’s beginning to change. Let’s take a lot at some of the pros and cons involved in this method.
Advantages
The biggest advantage to in-house production is the amount of control you get over your product. As the OEM, you’re naturally an expert when it comes to producing your work. As such, you don’t need to spend time teaching someone else to make it. In-house can also be more advantageous when it comes to scheduling concerns.
Since you don’t need to ship your product or parts over long distances, you can meet your scheduling needs more easily. In-house production also allows you to make more advanced components.
If your product requires a specific part that’s difficult to make, then you’ll have a lot of difficulties finding an OEM manufacturer to make it. However, with enough demand, you can find some custom manufacturing options.
Disadvantages
It shouldn’t come as a big surprise that there’s a huge shortage of skilled workers in America. Though this problem was a long time coming, it’s been exasperated by the COVID-19 pandemic. As a result, the New York Times predicts that two million skilled jobs could go unfilled by 2025.
As such, finding workers for your in-house production may prove difficult. Another big factor is that it will cost even more to make your product in-house. The sad reality is that overseas production is much more affordable than domestic. What’s more, outsourced OEM production is typically higher in quality than in-house. So, ultimately, you’ll be paying more for a potentially inferior product.
Why China Is Uniquely Qualified to Handle OEM Product Manufacturing
There’s a reason why the vast majority of OEM outsourced production goes toward China. China accounts for over 28% of all global manufacturing output. The advanced production capabilities in the country make it easy to meet huge product numbers at an affordable price.
In particular, clothing and electronic brands like Nike and Apple outsource their manufacturing work to the company. In the wake of the COVID-19 pandemic, China is poised to be one of the first countries to dive back into the manufacturing industry.
Despite being one of the early countries to be hit, the government has been able to largely contain the spread within the country. As such, China will have more skilled laborers than many other countries combined to meet OEM product demands.
Ready to Save Money On Your OEM Production? Contact Shield Works
We hope this article helped you learn whether or not outsourced OEM product manufacturing is the right decision for your company. Ultimately, the decision depends on your specific set-up. But, the right arrangement can allow the company to divide and conquer in ways that are simply impossible while maintaining an in-house division.
So, how do you find the right manufacturer? Look no further than Shield Works. Our British-owned company works out of China to provide you with affordable manufacturing solutions, as well as expertise in nearly every product category. But, don’t take our word on it. Contact us today so we can walk you through what we can do for you.