faq

OEM (Original Equipment Manufacturer) is a company that manufactures products which are to be purchased by a second company and retailed under the brand of that second company.

This allows the purchaser to concentrate on their core strengths of sales, marketing and sometimes concept design and the OEM manufacturer to complement those strengths by bring their own expertise to the table. It’s also a great way for companies that want branded products to avoid major investment in plant and additional workforce, including expensive engineers and project managers.

There are a many reasons for engaging the services of an OEM manufacturing company but some of the more common ones are:

  • To effect a quick market entry in an already developed sector. This is a good way to enter a market that’s just taking off before the major players are fully established and can bring long-term competitive benefits.
  • For “giveaways” or promotional events – if you only need a very small quantity this won’t be the most cost-effective solution and a marketing consultancy would be able to add your logo to pre-purchased pieces, but if you’re looking at quantities in the thousands to millions range, then having your product custom manufactured can reduce costs and ensure exclusivity.
  • For the long-term benefits – a good OEM manufacturing partner won’t see you as a “one-off” customer (unless that’s exactly the relationship you want because you need something made as a “one off”).

ODM Manufacturing, or Original Design Manufacturing, is the process of having another company design and manufacture products that are branded by the original company.

This means that a company which specializes in something like sales and marketing can focus on its core business and allow another company, the ODM supplier, to take care of the design and manufacture of the products it wants to sell and market.

The benefits of this approach are obvious – a company that uses an ODM supplier can focus on its core business strength while utilizing the ODM manufacturer’s expertise to get the right products at the right price, without the headaches of project managing the process or investing in additional equipment and labor.

Why use an ODM supplier?Let’s take China as an example. In China manufacturing is usually cheaper and more cost effective than producing the equivalent goods in the West. It is possible for a company that needs an ODM product to engage a factory to make use of that advantage – the cost benefits come from low labor costs and local incentives.

There are two basic options for making ODM products in China:

  • Direct contract with a single manufacturer – at first glance this seems like an attractive option because, at face value, it would appear to be the cheapest (until you talk to an ODM management company). These agreements, however, can tie you into contracts where you pay for inefficiencies in the supply chain and the factory’s management. This can lead to you paying for down time during which the company needs to continue paying its workforce and bills, even if no work is being done. It also leaves you with limited options in the event of quality issues. Another factor to consider is the cultural and linguistic difficulties that can cause misunderstanding and project delays.
  • Working with an ODM management company – these companies operate without their own factories.Instead they engage with all parts of the supply chain to ensure the best pricing and quality for the components of your ODM product. They will work with an assembly factory to ensure the cost and the condition that your customers expect. These companies make their profits by reducing costs and improving the efficiency of the overall supply chain and don’t normally cost more than a manufacturer. They also usually provide all of the the benefits of Western account managers who are in tune with your needs and used to overcoming the language issues and cultural problems of China.

We operate and offer 2 basic pricing schemes.

The first one is a simple buy-sell scheme – we quote a product price to you and you buy the product for that price. This pricing structure is good for companies ordering a minimal number of products and doesn’t require intensive product development.

The second pricing scheme consists of a retainer plus a commission on the product purchases. This scheme is more applicable towards companies which have more product development requirements and are producing larger range and quantities of products.

When your order is placed, before the product development work is finished, we will kindly ask you to deposit 30% of the total order cost. And before shipping the balance payment – 70% – will be required.

It depends on the situation:

–          if you provide us with all necessary layouts or we choose those products, which already exist, then it will take us from 7 days up to 30 days to produce the order – depending on the quantity and the complexity of the product. But in general it takes us 14-18 days to produce the order;

–          if we need to develop and design the product, which doesn`t exist, then it will take us from 7 days up to 20 to develop and design all necessary parts of the future product + it will take us about 7-14 to approve everything with you (including the time for amending something according to your requests) + the time for the production (about 14-18 days as we wrote before). So, in general it will take you about 4-6 weeks to produce a totally exclusive product which exceeds all your expectations.

MOQ depends on the type of product, which you require. But to be more exact, let us describe several possible MOQ variants:
– when we talk about printed materials and packaging – the bigger quantity you order, the lower price per piece you get. It means that in order to receive a cost effective proposal from our side the MOQ for printed materials will start from 5000 pieces – if we speak about simple layouts. And we can discuss the 1000 MOQ – if we speak about some exclusive types of printed materials of packaging;
– when it goes about giveaways – if you already decided to produce giveaways in China, for sure it will be much more efficient for you to make one big order, which will last you for a long period of time and will cost you less. E.x., your company is a retail seller of paper party decorations and you decided to produce paper lanterns with your logo, which will be used for different types of promotion. If you decide to order 1000 pieces of paper lanterns with your logo, it will cost you about 0,30 USD for 1 piece 30 cm in diameter. And if you change the quantity for 5000 pieces – 1 piece will cost you 0,18 USD.
– if you need to produce electronic devices and accessories for them – it depends whether you need OEM or ODM production. If you need to produce something unique, than you need to produce a mold and after that can produce any quantity of products, which you need – even 100 pieces. But if you need to produce some products, which already exist and only put your logo on it, then the MOQ will start with at least 500 or 1000 pieces. Anyway, the principle “the bigger quantity – the lower price” remains the same regardless of the situation.