OEM（Original Equipment Manufacturer）Definitive Guide
1.What is OEM ?
OEM (Original Equipment Manufacturer) is the entrusted manufacturer according to the needs and authorization of the sample manufacturer, and produces according to the manufacturer's specific conditions. All design drawings, etc. are manufactured and processed completely in accordance with the design of the sample manufacturer.
OEM is the abbreviation of Original Equipment Manufacturer in English. According to the literal meaning, it should be translated as original equipment manufacturer. It means that a manufacturer produces products and product accessories for another manufacturer according to the requirements of another manufacturer. It is also called OEM production or authorized OEM production. . It can represent processing by outsourcing or subcontract processing. Domestically, it is called cooperative production and Sanlai processing, commonly known as processing trade. First popular in developed countries such as Europe and the United States, it is a game rule for large international companies to find their respective comparative advantages, which can reduce production costs and increase brand added value. This kind of production method is more popular in the domestic appliance industry. For example, TCL ordered the production of washing machines in Suzhou Samsung, and Changhong produced washing machines in Ningbo Disheng.
Specifically, OEM (Original Equipment Manufacturer) is the original equipment manufacturer, ODM (Original Design Manufacturer) is the original design manufacturer, and OBM (Original Brand Manufacturer) is the original brand manufacturer. Party A favors the production capacity of Party B and asks Party B to produce products designed by Party A using Party A’s trademark. For Party B, this is called OEM; Party A’s technology and design are favored by Party B, and Party B introduces production and affixes Party B’s label. For party A, this is called ODM; A creates brand A by itself, and B produces and sells products with brand A. For A, it is called OBM.
The original factory commissioned design ODM is in the product design and development activities, through high-efficiency product development speed and competitive manufacturing efficiency, to meet the needs of buyers. The technical ability is enough to improve the design ability in the future, and then can start to accept the case and deal with the related affairs of design and development.
2. Detailed Explanation
(1) OEM is the abbreviation of Original Equipment Manufacture. It refers to a "foundry production" method, which means that the producer does not directly produce the product, but uses the "key core technology" that he has mastered. ", responsible for the design and development, control of sales "channels", the specific processing tasks are handed over to other companies to do. This method is a universal phenomenon that gradually emerged in the world after the electronics industry has developed in a large amount. Major international companies such as Microsoft and IBM all adopt this method.
(2) The term OEM is simply too common in computer hardware products, such as OEM optical drives, OEM monitors, and OEM mice. Some people even think it is a quality-assured brand. So, how much do you know about OEM? Does it mean that a product is an OEM product?
In fact, OEM has a close relationship with modern industrial society. Some well-known brand-name commodity manufacturers often turn to other manufacturers for help because their factories cannot meet the requirements for mass production, or they need certain parts. These vendors who lend a hand are called OEMs. If it is extended to the IT field, it means those manufacturers that carry out foundry. For example, CPU fans are not produced by Intel or AMD. They usually find professional motor manufacturers like Sanyo Corporation for fan OEM production.
3. Development History
OEM is an inevitable way under the trend of large-scale social production and large-scale collaboration. It is also one of the effective ways to rationalize resources and is the result of large-scale social production. In Europe, OEM industry associations have been established as early as the 1960s. In 1998, OEM production and trade reached 350 billion euros, accounting for more than 14% of the European industrial output value. OEM production has become an important component of modern industrial production. part. With the further acceleration of economic globalization, OEM demanders may choose OEM suppliers on a larger scale, especially to countries and regions with low processing and manufacturing costs.
In Asia, in order to quickly occupy the market and reduce production costs, Japanese companies first adopted the international OEM production and trade form. The take-off of the "Four Asian Dragons" is also inextricably linked to OEM. Among them, Taiwan has long become the world's largest OEM base for PCs, and India has also become the world's largest exporter of computer software through OEMs. In the IT industry, from technology to components to software functional modules, who is the all-rounder? When talking about this issue, Compaq President Feifer said: "Make money in the most direct way!" and publicly stated that he would save the burden of so-called assets (plants, equipment, office buildings, etc.). Some people even claim: OEM creates the entire IT industry! The American Nike company, with its annual sales revenue of up to 2 billion US dollars, does not have a production plant of its own, and only focuses on research, design and marketing. Its products all adopt OEM methods and become a successful model of OEM operations in the world.
In an environment of strong demand created by global economic expansion, my country's advantages in human resources and large-scale production are gradually being reflected. Since the reform and opening up, processing trade has been developing in full swing on China's land. Its share in foreign trade has always been more than 50%, and it has become the most important contributor to the trade surplus. This momentum will intensify in the short term.
4. Development Advantages
The OEM method is widely used in the manufacturing industry, especially in the rapidly developing information industry. For example, according to statistics from the world’s authoritative statistical agency IDG (International Data Group), more than 95% of the hard drives used by global personal computer manufacturers are provided by three major hard drive suppliers, Seagate, Quantum, and Western Digital, in the form of OEMs. The reason why it can be widely used is that he has adapted to the needs of the new competitive situation brought about by the rapid development of global science and technology after entering the 1990s. The OEM method adapts to the development of this new situation with its flexible and effective management characteristics, so it can be widely used.
Adapt to technological development
The rapid development of technology has led to the shortening of product life cycles. The company’s competitive strategy is shifting from a production-oriented approach that focuses on expanding production scale and reducing production costs to a market-oriented approach that focuses on the application of new technologies and quickly launches new products. According to IDG data, in the 1950s and 1960s, the life cycle of electronic products averaged 10-12 years, and this value dropped to 6-18 months in the 1990s. In the era of electronic information where new technologies are constantly emerging, business operators have rushed to increase their huge investment in research and development of new products in order to gain competitive advantages. In order to convert research results into commodities as soon as possible to occupy the market, many large companies have used key components Produce by yourself, and contract out the auxiliary parts by OEM for other companies to produce. This can not only ensure that the production cycle is shortened, but also the large amount of funds saved for production equipment can be used for research and development, so that the company can respond to the market quickly. Maintaining a virtuous circle, companies can also adjust the scale of production in a timely manner in accordance with changes in the market situation, so that it is possible to maintain a flexible and flexible production mechanism that adapts to the dynamics of market development.
From another perspective, the product life cycle is shortened, and the mental wear and tear of enterprises for investment in production equipment will inevitably increase. In order to reduce opportunity costs, a large number of OEM methods are used for production. "Arrow" strategy.
Brand Development
Economic competition is increasingly spreading on a global scale. Brands and channels are increasingly showing an important role in the final value of actual products. The original manufacturer's mark in the OEM method illustrates the importance of this.
In the economic competition, people are increasingly aware of the importance of the brand, because only by establishing a good image among consumers can we win the support of more marketing channel partners, and can we make the products popular through the joint efforts with channel partners. Penetration of wider consumer groups. For this reason, many multinational companies with good business performance have been focusing on the construction of brand image and marketing channels. Therefore, make full use of OEM methods to push mature products or products with production advantages of other companies into their own marketing channels, and use their own advantages in value-added services to win a wider range of consumers. This can also be called " A good strategy for "borrowing chickens to lay eggs".
Information Management Development
With the development of science and technology, computer integrated production system (CIMS) has gradually been widely used in the production process, and quality has gradually become a controllable factor in the production process, which enables OEMs to provide consumers with products produced on behalf of consumers. Material guarantee. This is one of the reasons why the OEM method is so popular in the information industry with a high degree of production automation. This is also the reason why multinational companies like IBM and HP with only more than 100,000 employees are driving tens of billions of dollars in sales. one. Investing limited resources in channel construction also provides a fundamental guarantee for companies to increase market response speed.
Customer solutions
In the era of information economy, the division of labor in the industry is becoming more and more detailed, new products are emerging one after another, and the content of high-tech is gradually increasing. It is impossible for consumers to judge their applicability based on the technological content of products, because what they need is a full range of solutions. Service. In a sense, modern enterprise competition is to assess the ability of enterprises to discover consumer needs and provide comprehensive solutions for them. The importance of a single product is gradually decreasing. The real problem is how to meet the increasingly complex and personalized consumer demand.
The OEM approach proposes a good way: that is, the company uses its own proprietary technology as the basis to melt into other products produced by OEM, so as to provide customers with solutions that suit their needs, which not only promotes the development of the company’s own technology, but also strengthens In addition to the influence of its own brand, customers can get more comprehensive, timely and thoughtful services from the comprehensive solutions. From another perspective, OEM companies have also developed under the drive of the company, which fully embodies the principle of rational allocation of resources. In addition, operating in an OEM manner can more effectively allocate the limited internal resources of the enterprise, minimize the level of management, and improve the efficiency of operation and management.
Build a competitive advantage
The development of modern economy has changed people's views on pure competition. Competition and cooperation have become the two major driving forces for the development of modern enterprises. In terms of products that have their own advantages, the use of competitors' OEM products makes their advantages more prominent. At the same time, competitors have new room for development, and competition has become cooperation. At the same time, with the rapid development of science and technology today, it is difficult for an enterprise to master all the patented technologies of a product at a time, and the integrity of intellectual property rights can be guaranteed by providing products in an OEM manner between each other. In order to avoid disputes or waste of resources caused by repeated development, it can also promote the market influence of a certain technology and make it a new industrial standard or a group alliance standard, making disorderly competition relatively orderly.
5. Supply Method
ODM (Original Design Manufacturer) supplier design plan supply method:
1. Buyout method: The brand owner buys out the design of a certain model product that the ODM manufacturer has ready, or the brand owner separately requires the ODM manufacturer to design a product plan for itself.
2. Non-buy-out method: The brand owner does not buy out the design of a certain model product of the ODM manufacturer, and the ODM manufacturer can sell the design of the same model product to other brands at the same time in a non-buy-out manner. When these two or more brands share a design, the difference between the products of the two brands is mainly in appearance.
"Building a brand" OBM (Original Brand Manufacturer): Develop your own corporate image and obtain the greatest economic benefits.
In the industrial society, OEM and ODM are commonplace. Because of the consideration of manufacturing cost, transportation convenience, and saving development time, well-known brand companies are generally willing to find other manufacturers for OEM or ODM. When looking for other companies for OEM or ODM, well-known brand companies also have to bear a lot of responsibilities. After all, the product is crowned by its own brand. If the quality of the product is not good, customers may come to the door for complaints, or they may have to go to court. Therefore, brand companies will definitely carry out strict quality control during the commissioning process. But after the foundry is over, the quality cannot be guaranteed. Therefore, when a business tells you that the manufacturer of a product is an OEM or ODM product manufacturer of a major brand, never believe that its quality is equivalent to that brand. The only thing you can believe is that this manufacturer has a certain production capacity.
6. Basic Conditions
1. Entrusting party
(1) Excellent technical output ability;
(2) Excellent brand image;
(3) Extensive market network;
(4) Product development capabilities;
(5) Technical control ability.
2. Manufacturer
(1) Excess and excellent manufacturing capacity;
(2) Sincere willingness to cooperate;
(3) Strong control over the market direction.
7. OEM Production Pros and Cons
Producer benefits
Compared with the buyer, the supplier is in a relatively passive position. However, it is still profitable to adopt the OEM approach.
(1) Enter the international market and participate in international competition
The competition in domestic home appliances and other industries is becoming increasingly fierce, and the market is becoming saturated. In order to expand the market, some domestic manufacturing companies are doing OEMs for foreign brands. Enhance the global awareness of the company.
(2) Scale production, reduce costs
Economies of scale generally exist in modern production, that is, as the scale of output expands, the unit cost tends to decrease. This may come from the deepening of specialization and the apportionment of fixed costs. If the company itself has this surplus of production capacity, the effect of cost reduction will be more obvious. Participating in OEM supply means expanding the scale of output, which not only increases product sales, but also reduces costs.
(3) Learning experience and perfect management
Companies that provide OEMs often play an important role in the product supply chain of OEM buyers. OEM buyers can have strong capabilities in production management, marketing, product development, etc. In the process of cooperation, OEM suppliers can play an important role in product quality. The management of control, cost control, and operating efficiency control organizes production in accordance with the requirements of the purchaser. With advanced organizational control, it is derived from the accumulation of "learning by doing" experience to improve the management level of the enterprise.
(4) Product innovation and capacity enhancement
If an OEM product is an innovative product, in addition to meeting the needs of the buyer, the supplier can also sell it on the domestic and foreign markets under its own brand. Either increase the length of the product line and launch new products; or deepen the depth of the product line and increase the variety of existing products, which increases the competitiveness of the enterprise in any aspect.
In addition to sharing the overall competitive advantage of the product, the OEM approach has one of the most distinctive advantages for both buyers and sellers, that is, the flexibility of buyers and sellers to enter and exit the market. As long as either party finds a more profitable way, the contract can be terminated at any time. From this perspective, the OEM market is highly effective.
(5) Saving sales investment
When an enterprise faces a foreign market, it is difficult to establish a completely independent circulation network due to its wide geographical area and different business habits in various countries. But if you borrow the sales power of a foreign company, it will be much more convenient. For example, Fuji, Ricoh and others have adopted OEM methods for their manufacturers and brokers in Europe and the United States. This reduces the friction between companies during operation, reduces the large amount of sales funds that companies should have invested, and enables companies to adapt to overseas operations.
Disadvantages of the producer
Most of China's enterprises engaged in processing, production and export have developed under the background of industrial transfer in developed countries. Therefore, most of their markets are overseas. With the decline of labor cost advantage and the expansion of industry production scale, such enterprises are generally faced with problems such as a decline in profitability and a slowdown in development speed. Many enterprises are making secondary development attempts. However, when such enterprises are thinking and trying to develop their strategies, there are three undesirable symptoms that require urgent attention.
(1) Scale expansion-the weakness behind the growth
Some export processing enterprises recognize the pitfalls of diversified development, and clearly mention that they will continue to seek development in the original industry at the emergence stage and do not engage in diversification. Regarding the question of how to seek development in the original industry, the answers of the senior managers of these companies are almost always "expanding the scale of production." However, with the increase in domestic labor costs, the production profits of export-oriented processing enterprises tend to decline, and the competitive position of the production link in the industrial chain also tends to decline; on the contrary, the profit rate and competitive position of the market link are relatively rising— ——This phenomenon will appear after all industries have developed to a certain stage. For example, the home appliance industry in the past few years has already encountered this situation, forcing home appliance manufacturers to finally implement a market integration strategy to achieve penetration and control of market links.
Although the expanded production scale can improve the company's competitive position in the industry, it has not improved its position in the industry chain, and it will also cause further reliance on market links, and its position may become more passive. When processing export-oriented enterprises are considering developing in the original industry, they cannot simply deal with the expansion of production scale. They must be especially cautious when considering the expansion of production scale. Otherwise, they will not only fail to enhance their competitiveness, but will also increase their transformation or exit. cost.
(2) Cost advantage-the weakness behind success
The key to the successful development of China's processing export-oriented enterprises lies in their significant cost advantages. Among the factors that form the cost advantage, the comparative advantage of labor prices in China is the main factor. However, with the development of the domestic industry, the cost advantage of export-oriented enterprises is being offset by some opposite factors:
First of all, the labor price advantage is not sustainable for a specific enterprise. With the development of China's economy, the comparative advantage of labor price must be weakening day by day. Due to rising labor prices, many companies have been troubled by the decline in profit margins; secondly, due to the cost advantage derived from labor prices, it is the advantage of China's processing export-oriented enterprises over similar production companies in other countries, rather than the uniqueness of a specific Chinese company Advantages, therefore, within the scope of domestic competitors, this overall advantage does not constitute a specific enterprise's competitive advantage.
With the intensification of industry competition, the development of specific enterprises has begun to be restricted by the lack of unique competitive advantages. Obviously, for specific enterprises, they must form their own unique competitive advantages that are not easy to imitate through other means. In terms of cost, the cost advantage obtained through efficient production organization ability, logistics system improvement ability and process innovation ability can continue to support the development of the enterprise. Processing export-oriented enterprises have long relied on labor price advantages and do not pay attention to the cultivation of such capabilities. Therefore, for such processing export-oriented enterprises, this brings success factors, and at the same time, it also becomes a hidden danger for the further development of enterprises.
(3) Agent export-the heaviness behind ease
According to a survey conducted by Fusi Management Consulting, export-oriented enterprises are highly dependent on foreign markets, and some enterprises rely on exports for more than 90% of their products. However, accompanied by excellent export performance is the fragile or even incomplete market function of such enterprises. The reason is that these export processing enterprises do not realize their product sales through the establishment of a sales network abroad. Instead, they generally adopt export agency methods and only deal with a few foreign first-level agents. For enterprises, it is completely a "black box". The ability to grasp the ultimate market demand, establish an efficient sales network, and flexibly use different sales methods has been abandoned for a long time.
The profit range has begun to shift to the market link, and these companies must have strong market capabilities, otherwise, in overseas markets, their own destiny will be increasingly controlled by others, and the risks of survival and development are increasing. In addition, many export-processing enterprises are also preparing to open up the domestic market, which requires sufficient market capacity. It is not feasible to use only a first-level agency.
However, export-oriented enterprises have adopted export agents for a long time, which has abandoned their market functions, and the formation of market functions takes a long time. Therefore, for processing export-oriented enterprises, the agency brings benefits, but at the same time it also causes the incomplete market function of the enterprise. It will become a heavy "debt" for the enterprise to seek greater independent development in the next step.
(4) Anti-dumping problems
Because the cost of OEM export products is lower than that of world-famous brands, they are often subject to anti-dumping when they are sold in developed countries, because local governments have caused huge losses to Chinese companies in order to protect their industries.
(5) Missing brand
When Chinese companies process more and more ingredients for others, their own brands will become less and less. For Chinese companies, this is facing a severe test.
8. Business Enlightenment
There are roughly three channels for Chinese enterprises to enter the international market:
1. Foreign trade companies buy out exports;
2. Enterprises self-export;
3. Accept processing orders for export.
From the perspective of the proportions of these three types, the proportion of foreign trade companies buying out exports has dropped sharply, self-operated exports have increased slightly (a large part of which is transformed from the former), and processing trade has developed rapidly and has so far been stable. More than 50%. In modern enterprise management, the finiteness of resources is an objective reality placed in front of every enterprise operator. Using limited internal resources to drive relatively unlimited external resources is one of the key factors that determine the success or failure of operations. The OEM approach puts forward an effective way and also provides several enlightenments to business operators.
Adapt to long-term development
In the business operation, it is necessary to formulate a long-term development strategy, put the investment in research and development in the first place, and make full use of the OEM method to transform the enterprise's production structure into a flexible structure that can quickly reflect the development of the market situation. Gaining an advantage in the competition is conducive to the rational allocation of assets and avoids blind investment in fixed assets. From a macro perspective, existing assets can be revitalized, providing a new way to achieve asset optimization and reorganization. The investment model of "big and complete" and "small and complete" can only reduce the efficiency of investment, but it is difficult to form an effective competitive advantage.
Provide brand management
Enterprise exports generally take the form of buy-out exports, where the brands of manufacturers are exported, and most of the market development costs are converted into brand value. The separation of self-employment enterprises will cut off the supply of foreign trade enterprises and is not conducive to the large-scale operation of export sales. It is easy to cause a situation of bullying and bargaining competition. After the deregulation of foreign trade management rights, production enterprises can completely export with their original brands and original channels, and can completely bypass the intermediate link of foreign trade enterprises. Enterprises do OEM export and take the road of brand management. That is to say, the export enterprise puts forward product manufacturing requirements to the production enterprise according to the production trend, and the production enterprise designs, develops and manufactures, and then the export enterprise exports with its own brand. The sales channel advantages of export companies, brand advantages, and the research-development-manufacturing advantages of production companies together constitute the overall competitive advantage of the product. The two sides have formed a community of shared future with complementary advantages and interdependence.
Actively participate in the agency
From the perspective of OEM transaction operation procedures, it is a prerequisite for the purchase company to find a suitable transaction. However, in this search process, both parties have to pay a certain search cost. Moreover, due to the more serious information asymmetry problem on the international scale, the partners found may not be suitable. The imperfection of the market has left a large space for export trading enterprises. An export trading company can act as an OEM import agent or an OEM export agent, negotiating and signing a contract with the purchasing company as a representative of the seller. In the above two agency methods, export trading companies appear purely in the role of agents, and only charge agency fees as intermediaries for OEM transactions, and have nothing to do with the transaction risks of both parties.
Use channel resources
Business operators must establish a global business awareness, make good use of domestic and international resources, and use OEM methods to shift their business focus from controllable factors such as product production to uncontrollable channel construction and comprehensive utilization of information. The factor comes up, the use of OEM methods to reduce unnecessary management levels and the consumption of management resources, to establish a smooth marketing network in a wider range, not just limited to the traditional traditional business strategy of seeking benefits from quality.
Enter the international market
Under the traditional foreign trade management system, the products of production enterprises are bought out by foreign trade enterprises for export. Therefore, the production enterprises themselves are almost completely isolated from the international market, and they have neither understanding of the development trend of the international market nor external pressure of competition. . This is an important reason why most companies still lack competitiveness after decades of state protection. If OEM operation is adopted, not only can the excess production capacity be used, but also the development and changes in international production can be captured indirectly. At the same time, the possibility that the buyer may terminate the contract transaction at any time also brings pressure to the company, making the company have to develop the most Good products come, and strive to reduce costs. In addition to satisfying OEM product orders, companies with mature conditions can also export under their own brands.
In terms of form, OEM exports are still general trade, but they have the characteristics of processing trade. In the process of product design, development and manufacturing, the quality of the company has also been continuously improved, which is far from simple processing trade.
Converged products and services
It is necessary to truly understand the market situation and consumer needs, integrate products with a full range of services, make full use of OEM methods to enable enterprises to provide end consumers with systematic and integrated solutions, broaden their horizons, and get rid of the limitations of a single product on enterprise development . Modern business management practices show that no matter how sophisticated a product or technology is, as long as there is a market, others will always imitate or even exceed it, and only providing services to consumers is the key to shaping a unique business image. It is the key to winning consumers and gaining the ultimate advantage.
9. The Difference Between OEM and ODM
1. Different concepts
(1) ODM is the product design proposal proposed by the client, regardless of who completed the overall design, and the client shall not provide a third party with a product using the design.
(2) OEM products are tailor-made for brand manufacturers. After production, only the brand name can be used, and the manufacturer's own name must not be used for production. That is, brand producers do not directly produce products, but entrust other manufacturers of similar products to produce them.
2. The copyright is different
(1) ODM depends on whether the brand company has bought out the copyright of the product. If not, the manufacturer has the right to organize production on its own, as long as there is no corporate design identification.
(2) OEM is done by the manufacturer itself from design to production, and the OEM can buy it after the product is formed. Whether the manufacturer can produce the same product for a third party depends on whether the OEM can buy out the design plan.
3. The difference between OEM and ODM lies in who owns the intellectual property rights of the product. If the client enjoys the intellectual property rights of the product, it is OEM, which is commonly known as "foundry"; and if it is done by the manufacturer The overall design is ODM, commonly known as "OEM".
4. In the industrial society, OEM and ODM are commonplace. Because of the consideration of manufacturing cost, transportation convenience, and saving development time, well-known brand companies are generally willing to find other manufacturers for OEM or ODM. When looking for other companies for OEM or ODM, well-known brand companies also have to bear a lot of responsibilities. After all, the product is crowned by its own brand. If the quality of the product is not good, at least some customers will come to the door to complain, and if the product is of poor quality, it may have to go to court.
Therefore, brand companies will definitely carry out strict quality control during the commissioning process. But after the foundry is over, the quality cannot be guaranteed. Therefore, when some businesses tell you that the manufacturer of a product is an OEM or ODM product of a major brand, never believe that its quality is equivalent to that brand. The only thing you can believe is that this manufacturer has a certain production capacity.
OEM design is provided by the brand, while ODM is a product designed independently by the manufacturer. The term OEM is simply too common in computer hardware products, such as OEM optical drives, OEM monitors, and OEM mice. Some people even think it is a quality-assured brand.
Extended Information:
1. OEM (Original Entrusted Manufacture) means "original equipment manufacturer" in Chinese, and its basic meaning is OEM cooperation, commonly known as "OEM".
OEM means that brand producers do not directly produce products, but use the "key core technology" they have mastered to design and develop new products and control sales "channels". The production capacity is limited, and there is even no production line or workshop. In order to increase production and sales, in order to reduce the risk of launching new production lines, and even to win market time, we entrust other manufacturers of similar products through contract orders, buy out the ordered products at low prices, and directly affix their own brand trademarks.
This kind of cooperation method of entrusting others to produce is called OEM, and the manufacturer that undertakes this processing task is called OEM manufacturer, and the products it produces are OEM products.
2. ODM is the abbreviation of Original Design Manufacturer in English, and the literal translation is "Original Design Manufacturer". ODM means that after a manufacturer designs a product, in some cases it may be taken by other companies, requiring the latter's brand name to be used for production, or to slightly modify the design to produce. Among them, manufacturers that undertake design and manufacturing business are called ODM manufacturers, and the products they produce are ODM products.
The product solution designed by the ODM manufacturer can be provided to the brand owner in a buy-out or non-buy-out manner:
Buyout method: The brand owner buys out the design of a certain model product that the ODM manufacturer has ready, or the brand owner separately requires the ODM manufacturer to design a product plan for itself.
Non-buy-out method: The brand owner does not buy out the design of a certain model product of the ODM manufacturer, and the ODM manufacturer can sell the design of the same model product to other brands at the same time in a non-buy-out manner. When these two or more brands share a design, the difference between the products of the two brands is mainly in appearance.
