What You Need to Know About ODM in China?

POSTED ON June 19, 2021

In the previous post, we talked about OEM in China. Here, we will talk about another form of outsourced manufacturing known as Original Design Manufacturing or ODM.

ODM has a broader service scope compared to OEM. The sole responsibility of OEM is manufacturing new product as per the design and specifications provided by the client, ODMs also provide product development services. In some cases, they even provide full product lifecycle services. The actual scope of services may vary depending on the capabilities of the ODM in china.

With Chinese factories becoming more technically competent and efficient, foreign buyers prefer to enter into arrangements wherein the manufacturer does part or all of the design work. When manufacturing new product. the most common arrangement is the one in which the buyer provides the basic design concept and specifications and the commercial design work is undertaken by the manufacturer. So, the buyer just provides some basic drawings and specification sheet, and the manufacturer takes care of the rest.

It is a good idea to go for ODM when you have a great concept or product idea in mind but you do not have the technical capabilities or an in-house team to do the commercial design part. When you go to an ODM with a new product idea, they will help you create design and specifications based on your product idea. Sometimes, the ODM may have their own product line similar to yours and can simply customize their existing product as per your requirements. They will not only design and manufacture new product for you, but will also brand it with your name. So, to anyone else it would look like that you have manufactured the product yourself.

In fact, it is very common for importers to select an already-existing product design from a factory catalog, makesome small changes to it and sells it under their own brand name. Mostly, they make changes to colors, packaging, branding or small changes to functionality or components.

1. You can have the ODM products customized. If you chosen a product off a factory catalog, you can have the design customized to suit their requirements. For example, in case of apparel and textiles, the buyer can have the fabrics, accessories such as zipper and buttons, print and embroidery, and the size customized. The product from the manufacturer’s existing product line would act as a template to build upon. When you get a Chinese factory to manufacture new product for you, it is best to communicate your requirements clearly and specifically to the supplier, leaving no room for misunderstandings later on.
2. ODM saves you a lot of money and effort. This is probably the single most important factor that makes ODM in china a great choice for manufacturing new product. It saves importers the need to invest millions of dollars in research and development to create a whole new product. Why reinvest the wheel when already exists and you can simply improve upon that? The money saved on R&D can be better spent on marketing your product.
   Also, with ODM products, the importer does not have to pay for moldsbecause they are already in use. This can also lead to considerable cost savings.
3. ODM can reduce the new product development time to half. In many cases, an ODM product is the only viable choice that an importer has. This is mainly because they don’t possess the technical expertise it takes to design and manufacture new product. ODM in China can save months of new product development time. Moreover, you save the time you otherwise spend on several revision before the product design is ready to go into commercial production.
4. Normally, the minimum order quantity requirement for ODM products is much lower compared to OEM products. This is because the supplier already has the setup for the specific design and they can use existing components and materials for manufacturing. They don’t need to source anything new, which reduces their risk. If you are a small business, ODM would be a more viable option because of the lower minimum order quantity requirements compared to OEM products wherein MOQs could be very high.

As with OEM in china, the advantages of ODM far outweigh the disadvantages. All you need is a reliable Chinese manufacturer who can bring your product idea to life. However, there are things that you need to be careful about when choosing the ODM approach for manufacturing new product.

1. Intellectual property is usually the biggest concern when it comes to ODM. You do not own intellectual property rights of the product. In fact, the product could be intellectual property of another company. Some legal issues may emerge at a later stage, so it is important to understand the finer details of the contract at the very beginning.
2. ODM products are not unique. There are usually several similar products floating in the market, so differentiation might be an issue.

The success of ODM products depends on how good your manufacturer is and how good a job he can do creating a unique product for you. It is best to hire services of a competent and professional Chinese sourcing agent, who can help you get the perfect product for your needs.