OEM, also known as OEM, was first popular in developed countries such as Europe and America. It is a game rule for international companies to find their own comparative advantages, which can reduce production costs and increase brand added value.

In China, it is usually called OEM, OEM, commissioned production, commissioned processing, brand manufacturing and production outsourcing from different angles. In essence, enterprises with dominant brands entrust other enterprises to process and produce in order to reduce costs, shorten transportation distance and seize the market.

Brand producers do not directly produce products, but use their own "key core technologies" to design and develop new products and control sales and sales channels. In order to reduce the risk of entering the new production line, they entrust other similar product manufacturers to produce through contract ordering, buy out the ordered products at low prices and directly label their own brands and trademarks.

Extended data:

Benefits of OEM

(1) Enter the international market and participate in international competition.

In recent years, the competition in domestic household appliances and other industries has become increasingly fierce, and the market has become saturated. In order to open the market, some domestic manufacturing enterprises do OEM work for foreign brands. Enhance the global awareness of enterprises.

(2) scale production, reducing costs

Economies of scale generally exist in modern production, that is, with the expansion of output scale, the unit cost tends to decrease. This may come from the deepening of specialization and the distribution of fixed costs. If the enterprise itself has this overcapacity, the effect of cost reduction will be more obvious. Participating in OEM supply means the expansion of output scale, which not only increases product sales, but also reduces costs.

(3) Learn from experience and improve management.

Enterprises that provide OEM often play an important role in the product supply chain of OEM buyers. OEM buyers can have strong strength in production management, marketing and product development. In the process of cooperation, OEM suppliers can organize production according to the buyer's requirements in the management of product quality control, success control and operational efficiency control, and have advanced organizational control, which comes from the experience accumulation of "learning by doing" and improves the management level of enterprises.

References:

Baidu encyclopedia -OEM