The manufacturer who undertakes this processing task is called OEM. OEM is the product of the increasingly detailed industrial division of labor in the global economic integration, which can increase the resource allocation of innovation ability for enterprises and reduce the investment in fixed assets as much as possible.
After mastering the core technology of products and establishing a mature marketing network, enterprises can no longer directly put into production, but complete the production task of their own products by letting other enterprises contract production, so that they only need to pay the material cost and processing fee, without having to bear the risks of equipment depreciation, self-built factories and production management, and can also place orders flexibly according to market changes at any time.
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Advantages of OEM:
For well-known brand enterprises. This approach can be regarded as a strategy to maximize profits. The earliest OEM in the world came from the clothing industry. In order to reduce costs and improve product competitiveness, many famous clothing enterprises in developed countries gradually expand their production bases overseas, entrust local production and manufacture, and then sell them in their own names in the market.
It reduces the occupation of production funds of entrusted enterprises and reduces the risk of market expansion. Compared with spreading stalls, mergers, joint ventures and mergers, OEM has the least capital for brand enterprises. Improve the speed of new products of brand enterprises entering the market. OEM is a good choice to occupy the market quickly in a short time. It is a good choice to effectively reduce risks without losing the market.
OEM is also an important means for foreign brands to explore the China market. With the increasing trend of global economic integration, foreign brands will also enter the China market on a large scale. The popularity and recognition of these brands in China market are not very high, and the construction of factories faces the problems of long cycle and high cost. Therefore, it is a shortcut to cut into the China market by using the relative excess capacity of existing production lines in China.
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