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Original Brand Manufacturing: Things You Need to Know
POSTED ON July 7, 2021
Most business owners have come across the terms ODM, OEM and OBM at some point. However, not everyone is clear about what clearly these terms mean. It is extremely important for every e-commerce seller or business owner who intends importing products from China to learn more about what these terms refer to. We have discussed OEM and ODM with regards to new product development in our previous posts. In this post, we will talk about OBM.Original Equipment Manufacturer (OEM): It refers to products that are designed by one company and then licensed out to a manufacturer to produce. A lot of electronics and appliances are Original Brand Manufacturing. A great example could be an OEM manufacturer like Microsoft that sells its operating systems or other digital devices to other computer companies.
Original Design Manufacturer: ODM is where an importer chooses an already-existing product design from a factory catalog, makes a few changes (colors, packaging, bundles, etc.) and then sells it under their own brand name. For example, there are companies that mass produce computers, smart phones and monitors for brand companies.
Now that we know what OEM and ODM are, we come to OBM.On the OEM-ODM-OBM continuum, OBM is probably the most matured phase.
Original Brand Manufacturer (OBM) is a term deduced from OEM and ODM only. Under OBM, the manufacturer not only owns the brand, but is also fully responsible for designing, engineering, manufacturing, and supply chain marketing of the product. The factories design and manufacture products under their own brands.
Normally, ODM strategy is used for low technology products, while Original Brand Manufacturing is considered a better option for highly sophisticated products, because these products often require complete integration of the design, engineering and manufacturing activities. A great example of OBM is Motorola, which designs, manufactures and markets its cell phones in-house.
OBM fully owns the products and brand. When compared to OEM and ODM, OBM usually involves higher costs to produce the products. In fact, not just cost, it also takes a lot of work as well. Within the company, OBM maximizes the use of resources.When it comes to new product development, OBM is a very important strategy. Many OEM and ODM companies are today venturing into OBM as well. Some companies are manufacturing certain OEM and ODM products, but at the same time they manufacture OBM products as well within the same product line.
This trend probably stems from the increasing importance that a product with a brand sign gets. The brand adds value to the product and makes it more trustworthy, prestigious and desirable.Chinese manufacturers have always been at the forefront of new product development both for the basic, everyday use products and the highly sophisticated products in the electronics and other niches.
Having achieved a lot of success in OEM and ODM products, manufacturers have gradually transformed to OBM. Guangdong province in particular has seen a steady rise in OBM manufacturers due to increased technology absorption and R&D investment.
It is natural for any manufacturer to strive to become an OBM and design, engineer and build products under their own brand name. This gives them more control over their business and obviously better margins. They don’t only do the entire new product development on their own but also manage the marketing and sales of the product. Most manufacturers work towards getting to the top of the game in manufacturing with OBM, but only a few succeed. One of the best-known Chinese OBM products is Huawei and there are many more like these.
Anyone who is looking to import new, innovative products at low cost from China for reselling in retail or ecommerce platforms will be spoilt for choice. There is a whole world of high—quality Original Brand Manufacturing products out there that can help you earn great margins on reselling.
Whether you are looking for OEM, ODM or OBM products in China, a good sourcing agent can be of great help. Without help from a local and experienced professional, you may find yourself confused and overwhelmed. If you have a sourcing requirement, whether it is new product development or simply sourcing an OBM product, we are here to help. Get in touch with our team with your requirements and they will get back to you with the best quote.
