Most Chinese manufacturers in almost all industries are able to offer a wide range of “catalog products,” or ODM products (custom branded factory products).
You can choose to buy an ODM product as an unnamed item, or you can have it branded with your company logo, keeping it as it is, or having minor changes made including changing colors, materials, and functions.
For many buyers, especially start-ups and small and medium-sized businesses that have limited budgets, it makes much more sense to buy ODM products. In reality, this is often the only alternative.
In this article, we explain the 5 most important advantages of importing ODM products from China.
1) ODM products can be customized
When it comes to materials, components and software, the dynamics are exactly the same as for OEM products. Co-contract manufacturers do not set specific rules on what buyers can and cannot do with the project.
Therefore, an ODM product serves as a “ready-to-use” model that can be customized to varying degrees. How large this size is, depends on the product:
Clothing & Textiles
- Colors
- Textile
- Components (e.g., zippers and buttons)
- Dimensions
- Printing and embroidery
Electronic Systems
- Components (e.g., sensors and transmitters)
- Printing and engraving
- Software
- Packaging
Clocks
- Watch face (e.g., layout, colors, and material)
- Watch case plating (e.g., rose gold)
- Back plate engraving
- Movement
Jewelry and Accessories
- Components (e.g., gemstones, metal parts, and wires)
- Plating
Furniture and Home Products
- Materials (e.g., wood)
- Textiles and leather (e.g., sofa covers)
- Components (e.g., steel fittings)
- Printing and stamping
An ODM product is the solution to meet the buyer’s needs. As mentioned above, Chinese manufacturers see themselves as laboratories that offer a production facility.
If you can’t clearly specify product details, including materials and components, the supplier fills in the gaps for you. Letting the supplier make such decisions rarely proves to be a wise choice.
It is therefore essential that you confirm all customization options, regardless of whether or not you intend to make any changes to the “standard specification”, assuming that the supplier has even one.
Let’s clarify what we mean by ODM products:
OEM: Any product that requires a custom-designed outer casing, with PCB design and/or with non-standard materials
2) Cut product development time in half
In some industries, buying an ODM product is often the only choice for start-ups and is indicative of a lack of extensive technical expertise for small and medium-sized businesses.
No manufacturer in Shenzhen would ever consider making new 3D outer shells and PCB designs based on a list of general requirements provided by the buyer. Instead, they expect the buyer to take care of all of this.
When you purchase ODM products, you are no longer required to produce as much material as is required when purchasing custom-designed products. This alone can easily save you months on product development time.
This is not only relevant for importers of consumer electronics systems, but also for those who import clothing and textiles, as new designs often require numerous revisions before they are ready for mass production.
3) Greatly reduced machining costs
Custom-designed products require additional equipment such as injection molds. Of course, such equipment is not free of charge, and it is always the buyer who finances any additional tools needed to produce an OEM design. An injection mold can cost between $150 and $50,000, depending on the design, materials, and dimensional tolerances.
However, you don’t have to pay for molds that are already in use, as is the case with ODM products. Therefore, an ODM product can save you anywhere from a few hundred to tens of thousands of dollars.
4) Reduces Minimum Order Quantity Requirements for ODM products
From the supplier’s perspective, it is much easier to produce an ODM design than an OEM one. It takes less time and is also less risky, as the supplier already knows the specific project. In addition, the supplier can use
Reuse materials and components already owned by subcontractors, rather than being forced to look for new ones.
As such, the supplier may offer a reduced Minimum Order Quantity for ODM products, compared to OEM products.
That said, the Minimum Order Quantities specified by suppliers on Alibaba, Globalsources and other supplier lists, are often the same as for ODM products, so don’t expect anything that is less than what is advertised.
Yet, an OEM product can force the supplier to considerably increase the Minimum Order Quantity to several thousand pieces per SKU, making this an even less viable alternative for many start-ups and small businesses importing from China.
5) Wide choice of existing ODM products
Perhaps the main reasons why many companies decide to buy ODM products, rather than OEMs, are that Chinese manufacturers are able to offer a wider choice of “ready-made” designs.
However, Chinese manufacturers are not yet champions of innovation and their ODM products are largely based on those of their buyers and competitors. This fact also raises other questions, in particular regarding software design and patents.
Obviously, importing counterfeit products is illegal, but companies based in and outside China continuously reproduce the elements and functions of competitors’ designs. However, in many cases, it is difficult to draw a line of demarcation.
Other factors to consider
When importing ODM products, you also need to consider other factors:
Purchasing ODM products is not an excuse to soften the due diligence and quality assurance process. You can go ahead and select ODM products directly from a supplier’s catalog or on a website, but confirm all the technical specifications (there are usually several options for each specification) before placing an order.
Since most enterprises want to brand ODM products with their logo, you also need to provide the following:
The logo file (.ai format)
Pantone colors
The location
The size
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