Products that are made by Original Equipment Manufacturers (OEMs) tend to be sophisticated and defined by high precision. These products are especially useful for industries that rely mainly on heavy vehicles, commercial objects, and similar equipment. Contracting with an OEM firm enables these industries to maximize the productivity of their machines and reduce the total cost of owning product components.
There are many benefits to working with an OEM in China. As OEM is relatively specific to several industries, there is a lack of clarity among people about its role and purpose. In this article, we shall explore the meaning of an OEM and how it can be advantageous for a client to work with an OEM in China.
What is an OEM?
The exact meaning of OEM has transformed over the last few decades. Initially, the term Original Equipment Manufacturer referred to a company that developed a main product. This product was then purchased by another company and branded as their own before being sold to a user. This definition has expanded now to describe companies that buy products from another firm, rebrand them, and sell to other users.
There are two industries where OEMs can be found often. These are auto and computer industries. Sometimes, an OEM is a client of a retail organization that sells products directly to its customers. For example, a Hyundai vehicle might not have all parts made by Hyundai themselves. Some of its parts might be made by an OEM.
In this system, the seller of the finished product is known as the value-added reseller (VAR). This firm adds value to the original item by introducing new features and services to it. The value-added reseller interacts closely with the OEM that customizes designs on a product on the basis of requirements given by the value-added reseller company.
Initially, an OEM would work on sales that happened business-to-business. The VARs would publicize products for selling to the public. Whereas an Original Equipment Manufacturer manufactures original items, an aftermarket manufacturer develops products that resemble and function interchangeably with those developed by the OEM. Though more affordable in comparison, aftermarket products are usually not original and do not function as well as an OEM product.
Benefits of working with an OEM in China
As mentioned earlier, there are several advantages to working with an OEM. Most popular brands tend to utilize assistance from manufacturing companies in China for making their products. Not only do these products offer lower costs, but they also ensure high quality.
Today, factories in China manufacture private label products that are used by companies worldwide. A study reports that China had more than 80 million employees in the manufacturing sector in 2002. By 2009, this statistic had grown to over 100 million which contrasts against the employment numbers in the same field in the other countries. In this section, we shall explore some of the benefits of opting to work with an OEM in China.
One of the most significant advantages of working with an OEM is that some manufacturers will offer a warranty until a specific period of time. If you receive a faulty product or notice it has other technical issues, you can contact the respective manufacturer and seek a replacement or another resolution for your issue.
By utilizing the services of an OEM, you can be assured that you are receiving a prompt response to your inquiries. This is due to the fact that less time is needed for the identification and production of products. In most cases, manufacturers already have access to original drawings for a specific product which reduces the time to research and come up with a design plan. This results in a quicker delivery time for your products.
Lower manufacturing costs
The differences between opting to manufacture domestically and have your product manufactured from a provider in China apply to the costs as well. Depending on where you are based, domestic manufacturers will usually charge greater costs and come with a high turnover. The availability of more affordable products from China makes China an ideal candidate for any small or mid-sized business.
Several factors influence the costs you incur in manufacturing products domestically. These include training costs, equipment costs, and costs to cover possible complications in the manufacturing process. If you work with an OEM in China, there are chances to reduce operational failures that occur in domestic manufacturing. Production efficiency is high and defects do not always cause complications in the production process. This also ensures smooth functioning of your business and reduced expenses.
Various kinds of support can be availed through an Original Equipment Manufacturer. When you contact OEM support engineers in China for assistance, you can be assured of getting access to their engineering team which will design your products. By talking to engineers and technical support staff, you can have access to different types of knowledge that will enable you to form the best decisions about your parts.
When you opt to have your parts repaired from a technician, you may or may not get access to the former level of performance that your product delivered. Working with an OEM manufacturer in China avoids this hassle from occurring by making sure that there is no degradation in product performance. In case of an issue, your manufacturer will ensure that you get a similar replacement product. Because they are unlike aftermarket products, OEM ensures better longevity through the high quality materials and testing protocol used to produce them.
Research indicates that products obtained through OEM are of optimum quality and build. When you try to replace a part within a product, you need to be assured that the replacement is of consistently high quality. This will enable the product to function well. OEM gives you this assurance since its parts are developed and tested to match the original design specifications. This gives them an additional level of protection and makes them more likely to be compatible with the needs of your industry.
Return on investment
OEM products made in China offer you the return on investment which you would normally expect from a supplier. All parts are developed to match and perform according to assigned design specifications. This helps to increase the life of your equipment. It also saves future expenses by continuously overseeing the performance of the product.
Improved production capabilities
Factories that are based in China are tasked with manufacturing products for businesses worldwide. Due to their expanded production range, Chinese factories are more than capable of consistently producing goods in bulk amounts. When you are outsourcing to China, you work with people who are experienced with producing tested and quality products in large quantities.
When you are working with an overseas manufacturer based in China, there are chances of you getting scammed. This is especially true if you have not met the manufacturer before and are relying on phone calls or messages to communicate with each other. Further, language barriers may also cause miscommunication in terms of what the product requirements might be.
Working with a reputable China sourcing agent or Chinese manufacturer is the ideal way to avoid these issues from happening. You can work with a registered organization in your community that works with local businesses and verified manufacturers to prevent scams from occurring. This system ensures that you are not being taken advantage of and getting access to only authentic manufacturers.
Lower costs of labor
When you decide to contract with a manufacturing firm in China, you receive access to the firm’s labor. This saves you the cost of recruiting and training employees within your own firm who can manufacture the desired product. It also saves you from incurring miscellaneous expenses related to hiring workers locally. Labor costs are lower in China by comparison which allows you to take advantage of this cost savings opportunity.
Opportunities for diversification
If you have been thinking about broadening your existing product line and offering new services to your consumers, outsourcing can enable you to accomplish that. With lower product prices and access to better production proficiencies, you can find ways to incorporate a variety of products into your present line of offerings. You can also find ways to sell this line to a more diverse international market. Outsourcing enables opportunities for you to expand your business in ways that traditional manufacturing methods do not.
Reduction in lead times
There are numerous ways in which you can reduce the time that it takes to deliver your products. You can choose to order them often and on a consistent schedule. By raising the frequency of receiving products, you will not be pressured by low inventory and will benefit from reduced delivery expenses.
You can also use a software to automate information about your orders so that it reaches your manufacturer in a timely manner. By sharing information with your manufacturer about how much supply you typically require, you can stay ahead of the delivering process.
OEM products are different in nature than ODM products or aftermarket products. They tend to offer many advantages to users. OEM products are often of high quality, affordable, and ensure longer lifespan in comparison to aftermarket products. There are many benefits of working with an OEM in China. These include warranty period, high performance and quality, a return on investment, better production abilities, cheaper labor costs, opportunities for expansion, and more. If you are considering manufacturing a product, consider talking to an Original Equipment Manufacturer today.
Sourcing Allies is a team of expert China sourcing agents that has helped western customers manufacture and source products from low-cost regions since 2006.
For more on China sourcing visit our website or write to us at firstname.lastname@example.org.
#OEM #Benefits #Working #China