Because of the economic boom in the last two decades, China has become a leader in the manufacturing industry. And because of its rich workforce, China is the world's manufacturing hub now.
These days most companies prefer to have their products made in China while working with OEM factories, as those factories can offer various benefits for your product manufacturing businesses. To get the most out of it, you need to understand their value and work with them in the right way.
What does OEM stand for?
OEM means Original Equipment Manufacturing and refers to those factories that produce products for another company which uses these items with its own brand names, and sell the products to customers.
An OEM factory has developed a certain product, after that, this product is bought by a brand owner and then branded as the buyer’s own product before they are sold to users.
Let's take an example of Nike shoes, literally, Nike does not own any factories, the production of all shoes is outsourced to those OEM factories (mainly in Southeast Asia) which are specialized in production.
Another example is iPhone. Huge quantity of iPhones is assembled by Foxconn, but all the phones are branded as “iPhone” which is owned by Apple Inc. Herein, Foxconn is an OEM factory.
Why do companies go for OEM factories?
Many companies may not have the necessary resources or expertise to manufacture high-volume or highly specialized products. So, better to outsource manufacturing and avoid the complexities of maintaining production in-house.
An OEM factory is able to make your products. All that you must provide is the design specifications for the item and the OEM factory will produce that for you. You will get the finished products by using your trademark.
The OEM factory has got the experience to make those products as they have well-set production lines with an established supply chain.
Advantages of using OEM factories
1. Low prices
Listening or reading the word "low," we tend to think we have to compromise something. It is a common perception that you have to compromise on the quality when you get your products manufactured at low cost.
But this is not the case when you have hired an OEM factory in China. Here, you can get your products at a lower price to beat the domestic production cost. You can't ignore the price of packaging and shipment, but still, the overall cost will be reasonable and affordable to your company.
China OEM factories are very efficient to compete globally. So, it allows you to get a cheaper price. You don't need to spend a lot of money to set up your production line as you can find reliable China OEM factories to do it for you. It is a good alternative for businesses to reduce costs.
2. Fast turnaround time
Chinese OEM factories are famous for their fast turnaround time. These companies have lots of professionals and have excellent setups for production fields. Most of OEM factories in China are flexible to work overtime at night or on weekends in peak production seasons. So, usually the lead time is shorter than the counterparts in other areas such as Mexico and Southeast Asia.
3. Easy replication and improvement
Suppose you liked a feature in someone else's product, and it is not present in your product, you can ask your Chinese OEM factory to add your product. This can be easily done by clearly indicating your demands.
Furthermore, if you do not like something in your product or get a bad customer's feedback about a feature in your product, you can replace it with a better version. A good OEM factory is willing to improve their products.
4. Custom products
The OEM factories produces the products under your brand label. You will keep the intellectual property marks associated with your products or designs. The factories assure you of the customization of your products.
If a company can design an excellent product but cannot manufacture the product, it can easily outsource the products to an OEM factory. It will be more timesaving and will give you more assurance in quality.
5. Professional service
Most of Chinese OEM factories are very professional in their dealings. The survival of an OEM factory mainly depends on the quality they offer.
Dealing with good Chinese OEM factories, you will get excellent customer service. You can directly talk to the manufacturer team anytime for your satisfaction. Their first and foremost consideration for these companies is to fulfill their customers' demands.
Steps included in using OEM factories
Following are some steps you should go through when getting the benefits from using OEM factories.
1. Detailed study
You can't immediately start working on it when you plan to start a new business and only have an idea. Similar is the case with OEM outsourcing. Before placing an order to the OEM factories, a detailed study of your business idea is important. It will tell you whether your idea is going to work or not.
2. Cost idea
Moreover, a keen analysis will clarify how much OEM will cost you. The production cost will help you determine your final product's cost price.
You should consider whether the production cost benefits you. For this reason, you can check out different OEM manufacturers according to your demand. A thorough study of the market will assure you a cost-effective product without compromising the quality.
3. Contract signing
The contract signing step comes when you have completed all the necessary prerequisites. At this level, you contact the OEM factory you have selected for your product manufacturing.
You must be specific about your product demand and specifications while placing the order. Furthermore, legal documentation is important when you are doing OEM outsourcing.
4. Time assessment
Production manufacturing takes time, and it is always a good idea to ask your OEM factories about the time of production. Time management will also help you to determine the exact product launching time.
It is very important to ask for samples prior to production. Prototyping is a process in OEM in which you can practically check your products' samples. At this step, you can also work on design and verification of product packaging.
According to specific product categories, you may need to send samples to a lab to get all necessary certification.
6. Quality inspection
The final step in OEM is quality inspection of your products. A reputable third-party QC company can work for the quality inspections for your finished products. These companies will assure you good quality for shipment of your final products.
Things to consider when selecting OEM factories in China
Different factors influence your business deal with the manufacturers. Before signing a contract, you should consider these factors to get the most suitable factory according to your needs. These factors will determine your relationship with the factories and your customers.
When selecting an OEM factory in China, the first thing you should consider is the company's experience in the field. The more experience the company is, the more confidence you will get. Furthermore, the experienced company will ensure quality products at a reasonable price between the promised time.
2. Ethical values
Ethics are very important in any business, especially when laborers work under you. When studying different companies to outsource the production work, you should consider the company paying special attention to the working class.
It is important to ask Chinese OEM factories to offer you a warranty for a certain period, which means you have more confidence about the product. You can ask for the replacement within the warranty time if any issue arises.
4. Quality control
You need to pay much attention to quality control, if you are trying to get a product manufactured by an OEM factory in China. You will want to ensure that you find one that will provide you with a product worth the money you are paying for them.
Quality control is the process of analyzing, testing, and evaluating a product for defects, non-conformities, or deviations from specifications. It includes the physical examination, test, measurement, visual inspection, and documentation of any item during, and after production to verify that the item conforms to specified requirements.
Using a China OEM factory is an excellent choice to get your product to market as soon as possible. The OEM factories have the necessary tools and experience to get your product manufactured, and they typically have the best price point. The only thing to watch out for is that you must work with an OEM factory with the best quality reputation.