What are the benefits of OEM?

Jan. 04, 2023

      1. For enterprises with well-known international brands. This approach can be regarded as the pursuit of profit maximization strategy. The earliest OEM in the world originated from the garment industry. In order to control costs and improve the competitiveness of products, many famous garment enterprises in developed countries have gradually expanded their production bases overseas, commissioned local production and manufacturing, and then sold them in the market under their own names.

Due to the reduction of production funds occupied by entrusted enterprises, the risk of market expansion is reduced. Compared with self-paving, mergers, joint ventures, and mergers, OEM entrusted processing occupies the least capital for brand companies. Improve the speed of new products of brand enterprises entering the market. "OEM" is a good choice to quickly seize the market in a short period of time. It is a good choice to effectively reduce risks without losing the market.

      Many world-class home appliance manufacturers have changed their business model from mass production to mass customization. Through OEM, not only can quickly complete the international coverage of the enterprise brand, but also reduce investment costs and investment risks.

      OEM is also the main way for foreign brands to expand the Chinese market. The specific method is what we usually call "three supplies and one supplement": incoming materials, incoming samples, incoming equipment, and doing compensation trade. As the trend of international economic globalization continues to strengthen, foreign brands will also enter the Chinese market on a large scale. The popularity and recognition of these brands in the Chinese market are not very high, and building factories by themselves faces the problems of long cycle time and high cost. Therefore, using the relatively excess production capacity of China's original production lines for OEM production is a shortcut to enter the Chinese market.

      2. For the entrusted enterprises, "OEM" makes full use of the idle production capacity, realizes the depreciation of equipment, reduces the production cost of unit products (including the products of the enterprise), and guarantees the income of employees. "OEM" has promoted the technological progress of the company, accelerated the speed of equipment replacement, and trained a group of technical experts and technical staff. "OEM" is conducive to improving the management level of enterprises and the management ability of entrepreneurs. It is beneficial to give play to one's own strengths in specialized production and improve one's competitiveness in specialized production in the industry.

     Doing OEM can not only earn money that you could not earn before, but also learn the management methods and experience of many well-known companies.