Since its inception, OEMs have intended to maximize the areas in which the partners are best at maximizing their profits, so that the partners can maximize their profits, that is, brand manufacturers use their own brands, sales channels, core technologies and other market resources to make them limited. The resources are concentrated on the core business in order to improve its core competitiveness. The supplier (OEM Supplier) provides products or components according to the requirements of the brand manufacturers. Under the condition of certain technical conditions and fixed costs, the scale of production is larger and the income is larger. The bigger the value, the greater the profit for both OEMs.
However, the reporter recently investigated the status quo of OEM enterprises in the lighting industry, especially the energy-saving lamps. When some brand manufacturers cooperated with OEM manufacturers, the formulation of their overlord clauses was directly passed on to the OEM manufacturers' production pressure, and eventually led to The breakage of the OEM manufacturer's capital chain has brought irreparable damage to its production and operation. Then, how will OEM and business partners face this problem, let us walk into OEM companies and listen to their voices –
Looking at domestic OEM from the phenomenon of "weird"
In the investigation, we found a unique phenomenon of domestic lighting enterprises. The fact that some energy-saving lamps of domestic brands of energy-saving lamps are produced by OEM companies, but they hold a denial attitude to show that the quality of products is excellent. Compared with domestic enterprises, the OEM production of foreign brands in China has become an open secret. Why is this happening?
According to Mr. Huang Zihong, Marketing Director of Zhongshan Tongji Technology Lighting Co., Ltd., domestic enterprises are based on quality. The root cause of foreign companies based on brand is because foreign companies already have a very complete product quality production system, as long as The other party chooses an OEM company for production, and foreign companies will force the other party to accept the production standards and quality requirements they provide. In addition, foreign companies focus on the brand, but also because of its brand value has covered product quality, as well as strict internal management, production standards and product quality requirements. In contrast, domestic lighting companies' technical maturity and brand culture are not strong enough, and they cannot form their own brand influence in the market.
It is understood that under normal circumstances, a brand manufacturer chooses an OEM manufacturer to conduct a comprehensive assessment of the market reputation, production process, quality control and production capacity of the partners. Three documents will be signed prior to the cooperation, including quality management, instructions for cooperation matters, and confidentiality agreements. In the cooperation contract, the delivery deadline, production cycle, production standard, and payment settlement method are also strictly regulated. Among them, it is not difficult to see that the confidentiality agreement is that the OEM cooperation parties should strictly keep the contents of the cooperation strictly, so as to restrict the two parties from casually revealing relevant information about cooperation.
In addition, brand companies have clear confidentiality provisions on cooperation contracts, and there are deep-seated reasons. According to Mr. Huang Zihong, this is because many domestic OEM companies want to hype themselves through the platforms of other well-known brands. The establishment of a confidentiality agreement means that the brand enterprise does not allow the other party to take their own free ride while protecting their own brand.
OEM production directly increases capital pressure
In the investigation, we found that when the brand manufacturers handed over the products to the OEMs, there were two bad phenomena. According to Zhang Fangxun, general manager of Zhongshan Keeneng Lighting Co., Ltd., most of the brand enterprises will not give the OEMs any funds and production materials in the early stage of the production of the products to OEM manufacturers. This is equivalent to OEM manufacturers to be their own. Purchase all production materials required for production. This will directly increase the capital pressure of the OEM manufacturers, plus the cooperation contract will specify the production cycle and payment settlement method, which can be up to 90 days of settlement, and settlement does not mean that you can get the check. The result of this has directly led to the breakdown of the capital chain of OEM manufacturers, especially small-scale production enterprises, and even small-scale manufacturers that are not strong enough will face the risk of bankruptcy.
Fang stressed that this is unfavorable to the whole industry. These small enterprises will face a strange phenomenon of “abandoning the pity, doing it and being difficult†in the face of the “overlord clause†of the brand manufacturers, and finally can only reduce the product quality. , the production of unqualified inferior products, and the reputation of the industry will be "shame."
Advantages and disadvantages, opportunity to innovate
During the interview, we found that many OEM companies in China have moved from OEM production to strong. According to Mr. Li, the deputy general manager of Hepu Electric (Zhongshan) Co., Ltd., the problem that mature brand manufacturers pay attention to is not in the payment method, but in the mode of product quality and production management. The two parties will continue to work together and exchange in production technology and management mode. The sharing of cooperation resources promotes the healthy growth of both partners. The two sides cooperate in technical support, personnel training and after-sales service to jointly solve the problems of the final customer in the purchase and use. Among the many cases of OEMs in China, the most successful one is the cooperation between Shanghai Yaming and Philips, and the cooperation with Philips is one reason for the rapid development of Yaming.
The cooperation with well-known brand enterprises has enabled OEMs to win the market first in word of mouth. It is conceivable that products of well-known brands can be produced. The general public will definitely think that the quality of OEM products will not be too bad. This has a positive side for the development and innovation of OEM companies' own brands.
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