From OEM to ODM to OBM – to achieve the upgrading and transformation of Labour-intensive manufacturing enterprises

OEM Factory upgrading,In the process of economic development in the past two decades or so, China has proposed two development strategies that are both big and big and big and big. The growth model of export processing has played a very big role in promoting economic growth. The total import and export of processing trade increased from OEM Factory upgrading is also important for china .

If we rely solely on processing trade to achieve economic growth, we will have a limited effect on upgrading the industrial structure

Taking Guangdong as an example, of the high-tech export products in Guangdong in 2005, 77.3% of the products were manufactured in Guangdong or Hong Kong and Taiwan by foreign enterprises. The key core technologies and equipment such as CPUs, integrated circuits and general software were mainly imported. 70% Manufacturing industry is still low-tech and traditional industries, a considerable part of the multinational companies are OEM (original equipment manufacturers) manufacturers, the lack of research and development capabilities and own brand.

OEM Factory upgrading 2,The consequences of this pattern of economic growth are as follows: Most of our products are exported at the low end of the value chain, without their own brands, and with relatively modest profits. At the expense of China’s resources, energy and environment, our economy is based on our labor At the expense of low prices and poor working conditions, many industries and enterprises are subject to the control of core technologies, lack of key intellectual property and the ability to independently innovate. Under such circumstances, Chinese enterprises urgently need to achieve their own upgrading and transformation.

Starting from OEM (Original Equipment Manufacturing), Enterprise Upgrade from OEM to ODM (Original Design Manufacture) to OBM (Original Brand Manufacture)

In order to catch up with advanced enterprises, we need to form our own core technologies and R & D capabilities through continuous learning and innovation, and develop our own global brands on the basis of this. Specifically, the processing enterprises must first establish a brand awareness, enterprises in developed countries to carry out OEM business, through the production process of learning, consciously accumulate their own manufacturing experience, while through reverse engineering, the introduction of equipment, processes Exploration, exploration, imitation and improvement, which in itself is a process of introduction of digestion and absorption and then innovation. After forming its own design and initial R & D capabilities, it gradually transitioned to ODM and expanded to the upstream of the industrial chain. With the further increase of enterprise strength, enterprises can develop to OBM. The self-owned intellectual property formed by ODM provides the necessary support for the development of its own brand. In this way, in the realization from OEM, ODM to OBM evolution at the same time, companies have also successfully achieved the continuous upgrading of technology and products.

Taiwan’s electronics manufacturers started from the production of transistor radios. In the mid-1980s, they only carried OEMs from low-end computers and peripherals in developed countries in Europe and the United States. At present, major computer brands such as Hewlett-Packard, Compaq, Apple, NEC More than 80% of notebook computers are produced by Taiwanese manufacturers. Taiwan electronics manufacturers already have strong R & D capabilities, higher added value of their products, mainly to accept ODM outsourcing model, some outstanding enterprises have entered the ranks of OBM. Another example is a group of well-known enterprises in Guangdong, such as Huizhou TCL, Desay, Shenzhen, Huawei, ZTE, Konka, Shunde, the United States, Galanz, Kelon Electric, most of these enterprises from the processing trade business to start by accelerating Successfully realized the transformation from OEM to ODM to OBM for the digestion and absorption of advanced foreign technologies and secondary innovation, and now it has become a large enterprise group with a professional R & D institution, independent brand and intellectual property rights and a certain international competitiveness.

Dongguan, Guangdong Province,OEM Factory upgrading trends, the computer products manufacturing base, the original is only engaged in a computer assembly processing and assembly area, by upgrading the industrial structure, has now become the world’s leading computer production and export base, highlighting the advantages of supporting industries, capable of processing computer manufacturing machine required zero part. Although still belongs to the nature of the processing zone, OEM Factory upgrading but the technical content of products has greatly increased than before. In the long run, there will still be a lot of room for growth in Dongguan to upgrade enterprises from OEMs to ODMs to OBMs.

Increase technology digestion and absorption and R & D investment to achieve processing enterprises from manufacturing to R & D upgrade

Due to manufacturing-oriented processing and lack of accumulation of technology, processing enterprises must import the advanced technologies they already have in foreign countries early in the development of their technological capabilities, imitate the production of products by foreign enterprises, and implement products to follow alternative strategies. In this process, we must step up technical learning and pay attention to the digestion and absorption of imported technologies so as to avoid falling into the vicious cycle of “introducing – backwardness – reintroducing – backwardness and backwardness.” At present, the ratio of technology import and digestion and absorption in China’s large and medium-sized industrial enterprises is only 1: 0.07, while the ratio of technology import and digestion in Japan and South Korea is maintained at around 1:10. Therefore, enterprises should increase their investment in technology absorption and enhance their ability to re-innovate on the basis of assimilation and absorption. For manufacturing enterprises that already have considerable technical strength and ability to innovate, they should continue to increase R & D investment and promote the continuous upgrading and independent innovation of enterprises.OEM Factory upgrading is key there.

In the current industrial transfer, the processing trade in the post-development areas should draw lessons from the coastal areas

At present, OEM Factory upgrading ,the international economy is undergoing a new round of industrial restructuring. While the developed coastal areas in China are actively undertaking the international industrial transfer, they are also shifting their industries to processing trade to other central and western regions such as the Central Government. For the late-coming areas in our country, we should pay attention to drawing lessons from the coastal areas in the implementation of processing trade. First of all, enterprises in late-developing regions should strengthen their brand awareness and can not only be satisfied with relying on simple processing and assembly to maintain their business survival, but also take their own brands and independent intellectual property rights as their long-term development goals. Second, Leading enterprises to OEM, we must strengthen technical learning, increase the digestion and absorption of advanced technology, focus on their own technology accumulation, as soon as possible from OEM to ODM to OBM upgrade and transformation.

IRL Group is a big manufacturing group ,with its own deisgn house ,IDH design house ,SMT line ,molding unit ,injection factories ,assembly lines,nearly 20 years experience in OEM ,ODM,OBM,EMS Manufacturing .If you want to develop your own rugegd device or product ,you can contact us .And the articles will help you for your rugged device manufacturing .