It's 2023, and the world of ODM manufacturing in China is in a much different phase than it was a decade ago - competitive, reliable, and continually improving.
Selecting a suitable ODM can be daunting with the ever-evolving manufacturing landscape. Although entering the Chinese manufacturing market might seem like navigating uncharted waters at times, it doesn't have to be if you follow some tips and best practices from those who have been there before.
But before we proceed, have a look at some valuable insights from EMS and ODM Market Research Report published by Market Research Future;
"The global EMS (electronics manufacturing services) and ODM (original design manufacturer) market is expected to reach at the market valuation of US 1,106.3 billion dollars by the end of 2025 - with an expected CAGR growth of 8.62%. Moreover, the Asia-Pacific region, mainly China, is expected to grow at the highest CAGR of 10.33%, due to its technological advancement."
So instead of looking at other options, why not join hands with the rapidly evolving ODM companies in China - as forecasted by the above-mentioned report.
In this blog post, we'll explore the advantages and risks associated with partnering with an ODM manufacturer in China in 2023. We'll also provide a proper budgeting solution for your custom ODM product manufacturing in the Chinese market that will give you the confidence to finally pull the trigger on investing in your manufacturing dreams!
Who is an ODM Manufacturer, and Why Do You Need Them?
ODM stands for Original Design Manufacturer, a company responsible for taking care of the entire product design and manufacturing process from start to finish. This includes R&D, product design, component selection, assembly, prototyping, testing, quality control, and even shipping.
The Major Concept:
How do you know whether you need an ODM or OEM manufacturer?
Let's understand who is the right fit for your project.
ODM Manufacturer: If you have a product idea or are planning to market any existing product but don't have all the resources to bring it to life, then you should seek an ODM manufacturer. They will manage every aspect of the project so that you can focus on other aspects of your business. The product is then marketed under the buyer's brand name.
OEM Manufacturer: If you already have a product design, blueprint or schematic and all the required components, then you should go for an OEM manufacturer. They will build your product based on your specific requirements and specifications. The product is marketed under the manufacturer's brand name during this process.
Most of the OEM products contain components from different ODM manufacturers.
For example, Apple is an OEM, but they outsource most of their iPhone manufacturing production to EMS and ODM - Check
Apple Supplier List.
Before you look for an ODM manufacturing partner, you should have a detailed understanding of the advantages and disadvantages of manufacturing in China.
Interested in learning more - Check out our related blog post!
Top 4 Advantages of Working with an ODM Manufacturer in China
We have already discussed who is an ODM manufacturer and why you need them, now, let's understand the advantages of partnering with an ODM in China for your project.
1. Low Upfront Investment:
Don't have much capital for R&D or production facility?
That's not a problem anymore when you are working with an ODM. They already have a developed production facility, qualified staff, and relevant expertise, so you don't have to invest much upfront.
Don't Forget This:
Choosing an ODM manufacturer without researching its credibility can be a risky move. The manufacturer should have a proven track record in your required field of expertise.
A big 'NO' for those with less than 5 years of relevant market experience.
The Other Side:
According to the most recent statistics, around 441.5 thousand manufacturing industrial enterprises are registered in China.
What do you think - What's the probability of finding your ideal ODM partner?
Let's consider the best scenario - one in a hundred.
That's like winning the lottery!
But suppose you had a chance to hit the right ODM partner in hundred tries. Do you have enough time - even when success is not guaranteed?
Probably not - So what's the solution?
The Right Way:
Partner with a Chinese contract manufacturing company. They will help you onboard the most suitable Chinese ODM partner for your project.
2. Hassle-Free Process:
As the ODM manufacturer handles everything from research to product development and shipping, you can easily focus on marketing, sales, and scaling your business.
But, always consider the quality of their services before signing any contract.
The Hidden Side:
This hassle-free process can become quite difficult if your chosen ODM manufacturer is unreliable.
What if they are not capable of delivering a quality product in time?
The whole project can take a huge turn, and you may face serious consequences - such as losing customers and reputation.
In order to understand the do's and don’ts of finding a suitable manufacturer in China - Check our recent blog post!
Recent Blog Post: Finding Manufacturing Companies in China
3. Quick Product Development:
Since the ODM manufacturer already has a setup, required expertise, and design, they can quickly start working on your product.
In ODM manufacturing, you don't need to reinvent the wheel - Instead, you can customize the existing product and make it more efficient.
The Other Side:
We can't quote any specific time frame for product development, as the process depends upon the complexity of a product and several other factors.
At MorphoMFG, we receive hundreds of ODM product manufacturing queries every month. Every client falls under different stages; some of them have only conceptualized ideas, while many others already have a prototype ready.
So it's difficult to generalize the time frame for product development; however, if everything goes as planned, the time frame is usually between 2 to 4 months - excluding ODM manufacturer onboarding time!
4. Viable for Low MOQ:
You must be thinking, "What does low MOQ viability means in ODM?"
Well, as the ODM manufacturer in China has everything in place. They don't have to invest much in setting up a production line or tooling; thus, they can accommodate low MOQ orders at competitive prices.
However, in the OEM manufacturing case, the cost of setup and tooling is quite high - So, OEM manufacturing can only be viable for orders with higher MOQ.
With ODM manufacturing, you can save a lot of cost and time - thus, allowing you to compete against your competitor.
But wait, getting a product with low MOQ doesn't mean compromising quality and functionality.
Avoid completely relying on the ODM manufacturer, which is what most failed startups do.
You might get attracted to their low MOQ - But what if they can't deliver a quality product?
It's always better to visit their manufacturing facility and check their quality control setup.
Now, what if you can't visit their facility?
Partner with a trustworthy and competent contract manufacturing company. They will perform several quality checks and ensure you get a quality product on time.
Learn more about finding the right Chinese contract manufacturer in our recent blog post.
Recent Blog Post:
Chinese Contract Manufacturer
So, these were some of the advantages and tips of working with an ODM manufacturer in China. Now, let's understand some of the risks associated with them - something you should know!
What Can Go Wrong While ODM Manufacturing in China
Understanding the potential risks while working with any ODM manufacturer is important. It will help you to avoid them in the long run.
Here are some of the common problems that you may face with ODM manufacturing:
1. IP Risk:
IP protection is one of the major risks associated with ODM manufacturing. In the case of re-manufacturing the existing product, IP rights belong to the manufacturer - which means that they can sell it to any other customer or even your competitor.
And if something goes wrong, you might end up with a million-dollar lawsuit.
Pamela Gordon, CEO of Technology Forecasters, discusses the hidden risks of ODM overdependence and says that "IP theft is nearly impossible to protect when the ODM does both design and manufacturing."
So, is there any way to protect your IP while ODM manufacturing?
Yes, there is.
It's the Component Control Method that we use at MorphoMFG. You don't need to send your design file to hundreds of ODM manufacturers - for a cheap quotation.
You just need to provide us with the design file, or if you only have the product idea in mind - we can help you with the design too.
Once the design is ready, we divide it into multiple components and assign each to different ODM manufacturers specialized in that particular component.
This method made it nearly impossible for any ODM manufacturer to copy your design, as they will only have the information about their assigned component.
2. Sub-standard Product:
As a business owner, you know how much it hurts to get a sub-standard product. The worst part about this is that it's almost impossible to return the manufactured products - as most of the ODM manufacturers don't accept returns.
Therefore, it is very important to perform regular quality checks during the production phase and hire someone who knows all about it!
The Hidden Side:
Most ODM manufacturers in China don't want you to know about their manufacturing capabilities. And most of the time, they only act as a third-party vendor and outsource the manufacturing process to another company.
They know how to convince you with their tactics. Once you receive a high-quality prototype or sample product - you might think you don't need any third-party QC team to inspect the products.
And that's what they want!
They won the games once you placed an order for batch production. The quality of your finished products may degrade drastically - as they have already got paid for it!
Don't trust them blindly, no matter how reliable and honest your ODM partner is. Make sure to hire a third-party QC team who can inspect the product quality on your behalf several times before shipment. However, a contract manufacturer can also be the best fit for this task.
Want to know more about outsourcing your quality control process to China - Check out our related blog post!
Related Blog Post: Outsourcing Quality Control to China
3. Inaccurate Pricing:
When you get quotations from an ODM - they pretend to provide a low-cost quotation, and most of the time, it is much less than your real budget.
But, what most of the ODM manufacturers do is that they only tell you the tooling cost, and they don't include the overhead cost, engineering cost and labor cost.
And once you have placed your order, they start charging you for everything related to the project, which eventually increases your overall cost.
The Worst Part:
You can't do your proper budgeting due to inaccurate pricing. Suppose you receive a quotation for the leather bag for $50. And once the order is placed and all our marketing campaigns are ready - you get to know that the cost has significantly increased to $70.
This will result in huge losses and a severe dip in your profit. In the case of Kickstarter campaigns, you don't even have an exact figure that you need to raise - due to inaccurate pricing.
You might receive several free quick quotes from Alibaba or similar portals, but they are mostly inaccurate or just a mouse trap!
Now you must be thinking - how to get accurate pricing?
We at MorphoMFG provide quotations based on real numbers you can trust. And yes, we promise it will be 99.9% accurate!
So, do we charge for providing an accurate quote?
Yes, we charge 4-figures for providing an accurate quotation, but the amount is quite low when you compare it to the overall cost you have saved. It might take several days but trust us; it will be worth it!
You can also check our pricing guide to learn more about how much your ODM products cost in China.
Onboard Your Chinese ODM Manufacturer with MorphoMFG – You Won’t Regret.
We at MorphoMFG ensure you catch up with the right ODM manufacturer in China. We have hundreds of reliable ODM partners in our database - which helps you to get the best manufacturing experience possible.
You don't need to worry about their credibility because we already did it for you! We conduct several pilot runs and inspect their product quality and process before adding them to our database.
We have something more to offer!
We provide a complete range of services like product design, prototyping, manufacturing, quality control, and logistics - all in one place. This means you can save yourself from running from pillar to post for every service.
So, in whatever phase you are in your ODM manufacturing project - MorphoMFG is here to help you out!
Give us a shot - and we promise you won't regret it.
Schedule a call with our experts today and get a free consultation on your ODM project. We are just a call away!
You can also visit our homepage to learn more about our previous clients and services. Happy Manufacturing!
Frequently Asked Questions
• ODM vs OEM manufacturing which one is best?
It solely depends on your product requirements and the nature of your business. Generally, ODM manufacturers are best for customizing the existing product designs. Everything from research to product design and shipping is their responsibility. Whereas in OEM manufacturing, you must conduct research and product design independently. And they will only be responsible for production and shipment.
The Right Way:
MorphoMFG is a contract manufacturing company that offers you the right way to do your ODM/OEM manufacturing in China. We can help you find the most suitable Chinese manufacturer who meets your product requirements and budget.
We also provide a complete range of services that you need to bring your product to the market. Schedule a meeting with us today and get a free consultation on your project!
• Who is the Best ODM Manufacturer in China?
The simple answer is "it depends". As there are thousands of ODM manufacturers in China, it's hard to pick the one that will be best for your project. It all comes down to the capabilities, product quality, and cost-effectiveness that you require.
Everyone claims to be the "best", but it's your research that will decide who will actually become the best ODM manufacturer for you. You need to survey multiple Chinese manufacturers and compare their capabilities - before you make your final decision.
But what if you don’t have the time to survey multiple ODM manufacturers in China?
This is where MorphoMFG comes into play.
We have already shortlisted hundreds of leading manufacturers in our +7 years of experience in contract manufacturing in China. So, we can assign you the most suitable ODM manufacturer specialized in your required product type.
Get in touch with MorphoMFG if you want to onboard a reliable Chinese ODM Manufacturer in your project!