Manufacturing is a huge part of China’s economy and one of the main reasons for the country’s growth. Almost half of all industrial goods are made in this country. Due to China’s consistent production of high quality products at affordable rates, international businesses are getting more interested in sourcing products from China. By working with a sourcing agent in China, you can get quality products at a reasonable price. Sourcing agents work directly with manufacturers, eliminating middlemen, which greatly reduces costs.

If you’re thinking about sourcing products from China, you have to find the right manufacturer. If your business deals in new and innovative products, you might be interested in OEMs. However, what exactly is an OEM? In this article, we will look at OEM meaning, benefits, and how to choose the right OEM in China.

OEM or Original Equipment Manufacturer is a company that manufactures products or components sold by another company. The term Original Equipment Manufacturer can be misleading as an Original Equipment Manufacturer manufactures a product, but the design or specification is not their own. The product design and specification are provided by the company manufacturing the product.

In most cases, OEMs are used by companies that don’t have the manufacturing facilities to make specialized products. Also, OEMs are great for companies with lower production volumes or who want to outsource. Therefore, OEM manufacturing can be considered outsourced or contracted manufacturing. The meaning of OEM can be simplified as a manufacturer who is willing and capable of making products according to your design and specifications.

Before you secure an OEM to manufacture your product, make sure you do your R&D, including design, engineering, and market research. Once you give the OEM your design specs, they make the products. Manufacturers who do OEM are cheaper, especially if they have large-scale orders. In addition to its numerous benefits, OEM manufacturing is also popular with smaller companies.

International businesses partner with OEMs when sourcing products from China to cut labor costs. Additionally, OEM manufacturing offers better quality and lets businesses focus on sales and profits. These are some of the benefits of OEM manufacturing:

• Better design and quality: Working with an OEM means outsourcing your manufacturing and production work to another company. By doing so, you’ll have more time to focus on your core business. Manufacturers are also very popular because they use cutting-edge technology, which results in better quality. Delivering high-quality, novel products to your customers is one of the easiest ways to increase their engagement. If you want to bring your customers innovative products, OEMs are the way to go since they also use innovative manufacturing processes.
• Cost-efficient: Cost-efficiency is another benefit of OEM manufacturing. The fastest way to increase profits is to cut costs. When you outsource production to an OEM, manufacturing and operations costs drop. Imagine a company that manufactures everything in-house. To manufacture products on a large scale, such a company needs proper manufacturing facilities. Manpower is also necessary to run manufacturing facilities, which increases labor and operational costs. Recruiting the right people for the job means a recruitment team. The hiring process itself is long and tedious, which makes it expensive. When you outsource manufacturing, you get rid of in-house hassles, reduce manpower requirements, and save money.
• Expansion and growth: When you outsource manufacturing to a reliable OEM in China, you save time and money. You can focus on other core business activities without worrying about manufacturing. Savings can be put towards marketing campaigns to help your business grow. Entrepreneurs want to expand their businesses. Outsourcing your manufacturing to an OEM frees up your time to focus on other business opportunities. In addition to efficiency, outsourcing to OEMs lets you spend more time on other relevant areas of your business, so you can grow. Outsourcing production means you also outsource risks and liabilities. If you hire an OEM service instead of manufacturing yourself, you save time, money, and opportunities.

• Enhancing customer satisfaction: No business survives without customers. When you offer high levels of customer satisfaction, sales go up, new clients come in, and disruption goes down. The more satisfied customers are, the more loyal they are. The more customers you keep, the more revenue you’ll make. Making sure your customers are happy is key to business growth. Due to their high-quality products, OEMs can help improve customer satisfaction. You benefit from economies of scale since OEMs produce in large quantities, making the products cost-effective. By passing some of the benefits on to your customers, you’ll increase customer satisfaction.
• Control over IP (Intellectual Property): Before outsourcing manufacturing to an OEM, companies typically do their own research and development. Hence, the products are protected by Intellectual Property. Since you hold the IP rights, it puts you in a stronger bargaining position. You can also switch manufacturers easily if you need to. However, businesses need to protect their copyright. Copycats won’t steal your unique product ideas.

When it comes to sourcing from China, it’s important to find the right manufacturer. It’s important to work with an OEM that specializes in the product you’re trying to make. Furthermore, manufacturers should be able to deliver high-quality products at a reasonable price. Before you start looking for manufacturers in China, you have to understand OEM. Choosing the right OEM in China can be tough, so how do you make sure you’re making the right choice?

Make a shortlist of OEMs: Alibaba and Global Sources are two websites that can give you a list of thousands of Chinese manufacturers. Unfortunately, not all the manufacturers that you find on such lists are reliable. If you’re just starting out, narrow your list by companies that you think specialize in what you want to make. Once you’re on the internet, find out as much information as you can about the ones you’ve shortlisted so you can further narrow it down. It’s not going to be easy. China’s internet is highly regulated and the government monitors access and may also censor websites. However, you should be able to find info on most major manufacturers. After you’ve finalized your list, it’s time to move on.

Visit the manufacturers: After you’ve shortlisted 5 to 10 manufacturers, you need to visit them in China. There are three benefits to visiting a manufacturer in person:

1. You can see the manufacturer’s manufacturing facilities first-hand.
2. You can meet the key personnel at the Chinese manufacturing facility who will manufacture your products.
3. The Chinese manufacturer gets a clear message that you take your products seriously and do not compromise.

Visiting the China manufacturing facilities isn’t an option for you? What should you do?

• Hire a sourcing agent: A sourcing agent can find and verify manufacturers for you, so that’s the biggest advantage. From their extensive network of partners and in-depth knowledge of the Chinese sourcing market, you can greatly benefit. Most sourcing agents have a local office in China with employees who speak English and local dialects. Since they are already in China, they can visit potential factories to ensure they meet your requirements. When you source products from China, make sure they meet your country’s safety and regulatory guidelines. By working with a sourcing agent, you can make sure the manufacturer has all the right licenses and certifications. The manufacturer can also verify the authenticity of the certificates. A sourcing agent can also help you negotiate, so you get the best deal.
• Watch out for conflicts of interest: It’s only possible to build a good relationship with an OEM if they’re also looking out for your best interests. If you’re scaling up your business, you need an OEM that’s open to innovations and design changes. Make sure your OEM doesn’t manufacture any of your competitors’ stuff. An exclusive contract keeps both parties focused, ensures the right production facilities, and protects trade secrets.

When you have a clear understanding of OEM meaning, its benefits, and the way Chinese manufacturers operate, finding the right OEM will be easy. Using a sourcing agent is advisable if you want to work with an OEM in China, since they know the industry inside and out. A Chinese OEM will make sure your products are cost-effective. Also, the products are high-quality because they’re tested according to specialized manufacturing standards. Furthermore, you’ll get specialized technology from OEMs, and you’ll keep all the IP and trademarks associated with your product.

AROOM GLOBAL is an expert China sourcing agency that has helped customers manufacture and source products from the world’s factory. Contact us at info@aroomglobal.com or visit our website to learn more about China sourcing and manufacturing services.