OEM advantage

OEM advantage

Reduce the cost of mature products:

For products that are about to enter recession from maturity, reducing costs is key to maintaining profits. If it is almost impossible to reduce costs domestically, then one can only look overseas or invest overseas or develop outsourced production. Direct costs may be much higher than expected. Purchasing from overseas vendors, although likely to be higher than their manufacturing costs in the short term, is profitable over the long term. With their own brand marketing, still does not affect the price of the product.

Supplement product line:

For those eager to supplement the product line manufacturers, OEM way is also a shortcut. After discovering that there is a time lag between the market opportunity and the launch of the product, manufacturers can make use of OEM products to quickly fill the market gap and seize the market. At the same time, carry out their own product design and development, once the time is right, you can replace their OEM products.

Improve the enterprise value chain:

Use of existing business sales network to expand its capabilities for a variety of products and more business sales and after-sales service.

Sometimes, the manufacturer's competitive advantage may not lie in manufacturing, but in sales channels and after-sales service, then the use of OEM transactions probably is an inevitable choice.

Detect market opportunities:

Sometimes buying companies also use OEM methods to detect the possibility of entering the market. Enterprises to market products to observe the market reaction. If the market responds well, companies can launch their own products; if the market response is flat, companies can also terminate the OEM contract, to give up the intention to enter the product market. In this way, the risk to manufacturers is much less than the risk they have to launch new projects

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