Posts by Sophie Hartzler

The Chinese government is on a mission to produce 70% of the world’s electronic components. When you think about it, that’s an ambitious goal.

However, electronics aren’t the only thing manufactured within its borders. In fact, China manufactures a considerable share of the world’s goods.

If you’re considering outsourcing products or services to China, however, how would you manage risk? Well, with some insider insight, you can safely reap the benefits of product assembly in China.

Keep reading to learn more about how to secure supply chain risk for product assembly services in China.

Understanding Supply Chain Risk

Global supply chain risk is one of the biggest concerns of the world’s shippers. You never know when your supply chain could become exposed to an unanticipated vulnerability.

These occurrences can lead to increased costs. Even worse, you could end up with unhappy customers. It’s critical for you to mitigate these and other supply chain issues.

More supply chain stakeholders are turning to supply chain risk management for this reason. The term refers to the processes, strategies, and tools used to reduce supply chain risk. They can help you to identify dangers that could affect your supply chain.

The Benefits of Managing Risk

Your company could enjoy considerable benefits from a supply chain risk assessment. For instance, a risk assessment can help you reduce profit loss. It can also help you to ensure peak efficiency in production, fulfillment, and delivery.

This kind of evaluation will also improve the speed and effectiveness of your company. It will help you to respond to emerging situations that could affect your supply chain.

A risk assessment will also help you keep up with regulatory issues and maintain compliance. Moreover, it will help you create a reliable process for managing unexpected interruptions in your supply chain.

Even More Benefits of Effective Supply Chain Management

China’s assembly companies have unmatched expertise in putting together complex goods like electronics. Still, regular risk assessments can help you protect the reputation of your brand.

They’ll help you increase your competitive advantage. Also, risk assessments will help you improve customer satisfaction.

Most customers take for granted that you’ll deliver products whenever they need them. In reality, however, supply chains are quite fragile. For every activity and every level of your supply chain, there’s a risk of disruption.

The Importance of the Risk Mitigation Process

Your supply chain might only have one supplier. Alternatively, it could have thousands.

Imagine a pharmaceutical company that needs a third party to supply pill bottles. It may also need another supplier for the external packaging. Meanwhile, this company might also need an additional supplier to handle labeling and other aspects of product packaging.

You may have your own employees who manage various tasks, like taking orders. Yet, you more than likely use a third-party credit processing company. In turn, that company might contract with another firm to perform credit checks.

Any point in this supply chain is subject to vulnerability. The reliable, timely delivery of your goods would depend on all these suppliers. If any of them fails to perform as expected, you might not have the ability to deliver your goods on time and at the right price.

Effective Risk Management Matters

With a risk management process, you’d start with identifying the parties in your supply chain. You must emphasize the most critical suppliers.

Next, you’d assess them for regulatory compliance. You can then go on to assess your suppliers’ suppliers.

You must review every supplier for insights into past performance. You must also assess their potential risks to your supply chain.

If you discover issues, you must address them immediately. It’s important to resolve your findings as quickly as possible.

In the end, you should set up a monitoring system with real-time dashboards and up-to-date reports. This kind of system allows for continuous monitoring of your suppliers and notification of any critical changes.

Key Risk Management Points to Consider

There are four primary steps in this process. They include:

1. Identification
2. Quantification
3. Mitigation
4. Response

You must identify the risks that can impact your supply chain. You must also identify where you can find these risks in your supply chain.

Next, you must estimate the potential financial, operational, and reputational impact of these risks. Then, you can develop strategies to offset the negative impact of various forms of supply chain disruption.

Finally, you must figure out how quickly you can respond to a disruption. You must also assess how long it would take your company to recover from this kind of event.

Product Assembly Services in China

Suppose you were to hire a product assembly company in China. In that case, you must perform robust due diligence and risk mitigation. You must uphold the integrity of your imported goods.

In the United States, for example, there’s growing interest in countering controversial business practices. With this in mind, the US government has issued an advisory about potential exposure to these kinds of activities in certain regions. United States lawmakers expect companies to perform robust due diligence to combat allegedly unwelcome business practices in these territories

Protecting Your Interests in China

Furthermore, this advisory is an interagency effort. Involved organizations include the following:

• Department of Labor
• Departments of State
• Homeland Security
• Treasury Commerce
• United States Trade Representative (USTR)

These agencies are working together to draw attention to supply chain risk to US businesses related to areas of special interest.

The advisory warns that US businesses must have an awareness of their legal exposure. They must know whether partner entities in the area are linked to companies that maintain disputable business practices.

If so, decision-makers in these firms could face liability for criminal statutes and sanctions. Meanwhile, their companies could face export controls and import prohibitions.

Areas of Special Concern

Again, many companies are deemed responsible for these allegedly disputatious practices have headquarters in specific areas. In these areas, it’s implied that many cases of aforementioned business practices occur. These companies participate in various industries, including:

• Agriculture
• Cell phones
• Construction
• Cotton
• Electronics assembly
• Footwear
• Gloves
• Noodles
• Sativa
• Sugar
• Textiles
• Toys

What Can You Do?

If you believe you’ve become exposed to liability, you must increase auditing and other supply chain due diligence practices. In the above reference, for instance, you’d monitor for warning signs of a potentially disreputable business partner’s savory business practices.

This would become especially important if you were to continue doing business with a possibly distasteful company. In this case, you’d closely watch a company that hides the origin of its goods or ownership.

You’d also practice extreme caution with a company that has high revenue but a low reported number of employees. You could evaluate this circumstance by reviewing the company’s contributions to China’s social insurance program.

You could also monitor for a company’s use of terms that seem to indicate that a company is spinning its unfair practices. This elevated level of due diligence is essential when dealing with suppliers to ensure the integrity of your company’s brand and reputation.

Stay Informed

As a business operator, it’s also important to stay informed about developing sanctions and Withhold Release Orders (WROs). You must also monitor goods highlighted by the Department of Labor. The agency maintains a list called List of Goods Produced by Child Labor or Forced Labor.

The list includes the names of products and companies subject to WROs. You should also monitor for names on Department of Treasury lists. These documents include Specially Designated Nationals (SDN) and Blocked Persons lists.

Conduct Independent Audits

There are anti-sanction laws in China. As a result, you could find it’s difficult to secure reliable and independent information from native entities. You could even have trouble eliciting accurate information from your legal aid in China.

Accordingly, when working with a service provider in China, you should also conduct independent, on-site audits when possible. This practice promotes increased supply chain transparency.

Your Responsibilities as an Importer

You can’t defend yourself from liability by claiming a lack of knowledge. For example, you could find out the first or second level of your supply chain in China has disappeared.

It’s counterproductive to use lack of knowledge as a defense. This kind of defense will set you back if the Chinese government engages your company.

This position will make it much harder for you to gather an origin to destination paper trail. You’ll need this information to satisfy any inquiry or detention notice from the Chinese government.

Doing Your Due Diligence

You must remain prepared for a government inquiry, especially if you suspect foul play on the part of a supplier. In this instance, you may need to gather supporting purchase records.

You might also need to gather production documents. You could also need to collect labor documentation.

Overall, you might gather the same information you would need during an unfair trade investigation. These types of investigations might include antidumping or countervailing duty verification.

The Big Picture

When you partner with a reputable OEM manufacturing service provider in China, your biggest benefit is cost savings. The assembly service will create your products in bulk. As a result, you’ll save money on production costs.

Furthermore, you’ll find that the products are of superior quality. Still, it’s vital to maintain strict testing standards. If you’ve hired competent OEM manufacturers in China, they can withstand your testing.

Leveraging a China Assembly Service

There’s a good reason why OEM manufacturers in China provide the most outsourced production in the world. China has advanced production capabilities.

These capabilities make it easy for companies to meet massive production numbers. More importantly, the companies can do so at an affordable price.

It’s true that China is one of the first regions hit by the pandemic. Yet, the government has been able to contain it largely within the region.

It’s for these reasons that large brands like Apple and Nike outsource their contract manufacturing to China. In light of the pandemic, the nation’s positioned as one of the first countries that can dive back into full steam manufacturing.

Partnering for the Win

Some companies couldn’t exist without China’s assembly services. China service providers have specialized technology that allows them to create components that many companies couldn’t produce on their own.

When outsourcing product assembly services, you allow another company to produce your product. Yet, you’ll keep all intellectual property and trademarks.

Still, another company manages production. In China, this process often takes place through a network of multinational suppliers.

It’s vital to locate and secure an agreement with a China assembly company that you can trust. An experienced consulting company can help you to do just that.

Let Us Help You Safely Navigate Your Importing Risks

Now, you have a better understanding of risk when working with product assembly services in China. If you need to find a reputable China service provider, Shield Works Precision Mfg. can help.

Please feel free to contact us today to learn more about reputable assembly services in China.

Despite recent uncertainty in the supply chain, China continues to serve as the second-largest exporter to the United States. For many companies, a partnership with a Chinese assembly service is essential for solidifying their full business potential.

Decision-makers around the world understand the importance of operating in a calculated and gradual way in China. With this in mind, how would you launch and scale your China assembly operations effectively?

Keep reading to learn more about outsourcing assembly and how to use a China assembly service.

Getting Off to a Good Start

Outsourcing production to China can serve as a vital part of your supply chain strategy. However, there are caveats involved when initiating business with China assembly services.

For instance, out-of-country interests typically have a modest local presence. They’re also unfamiliar with the nation’s bureaucracy and legal system.

Also, these firms must manage cultural barriers in the local business environment. Often, these companies make mistakes due to their lack of experience.

You can overcome these kinds of issues by working with a professional service provider that operates in the China market. You’ll find that this kind of consultant is aware of all local regulations. More importantly, they’ll help you operate efficiently from day one.

Managing Import Regulations

Companies often face another dilemma when starting business negotiations with OEM manufacturers in China. They face problems dealing with the local currency.

For some companies, doing business in China doesn’t justify the investment in establishing a local branch. On the other hand, some China service providers don’t want to accept payments in foreign currency. Some companies may not even have this capability.

By working with a China assembly service provider, however, you can enlist a consultant to perform these transactions on your behalf.

Finding a Stable Supplier in Uncertain Times

If ever an event represented uncertain times, the pandemic is definitive of this circumstance. During this and other market disruptions, companies must make operational adjustments. These adjustments result in a loss of time and risk-taking that are inherent to change.

Still, you can remain stable and flexible if you manage change properly. By outsourcing contract manufacturing in China, you can adjust to changes quickly.

Your business may have a sensitivity to these kinds of situations. If so, the benefits of working with a partner that always has their feet on the ground in China are obvious.

The Freedom to Focus On Growth

You need an efficient and economical solution for managing your business activities in China. With it, your sales managers can focus on finding more business.

Meanwhile, your company representatives can focus on other important business development functions. For instance, they can work on building your customer pipeline.

Tasked with managing your overseas interests, your team members could find themselves overwhelmed with China’s bureaucratic and operational requirements. As a result, they can struggle to find time to sell your products and grow your company’s presence.

Reducing Costs With the Right Partner

In most cases, it’s faster to have your products assembled in China. This is the exact kind of advantage your company needs.

China assembly companies can provide customized production facilities suited to your needs. These facilities serve as a cost-effective and fast solution for OEM manufacturing.

They enable you to operate your outsourced manufacturing processes responsibly. Meanwhile, your firm will continue to enjoy the benefits of a production operation that runs more efficiently versus one on your native soil.

Let’s have a look at a few more benefits of outsourcing product assembly in China.

Reduced Labor Costs

China has remarkably low labor costs. In China, the average salary is nearly half of that of salaries in the United States. This circumstance is a huge benefit for labor-intensive industries.

Outsourcing product assembly in China can help you to lower labor costs due to high turnover. You can also further lower labor costs by outsourcing to developing cities in China.

Reduced Product Costs

China is the home of the largest manufacturing sector in the world. In a single year, China produced nearly 30% of global manufacturing output. Furthermore, export growth in China at times matches the growth of all other export activities in the world.

What that means for your business is that there’s no need to import the many goods and raw materials needed for production. In turn, you can avoid import tariffs.

The Chinese manufacturing ecosystem is engineered to build products at lower costs. Chinese factories can easily access components, affordable labor, a strong technical workforce, and assembly suppliers.

More Efficient Use of Company Resources

China is rich in talent and resources. The country has a labor pool capable of handling your in-country interest in several areas, including:

• Accounting
• Customer service
• Information technology
• Manufacturing

You can save time and have more of it to concentrate on your business by outsourcing.

Meanwhile, your in-house team can focus on the core competencies of your company, such as team building, leadership, and product development. You can spare your company from using their talents wastefully on paperwork and other mundane tasks related to your manufacturing process.

Innovation You Can Count On

China ranks near the top of the global list of innovation among countries. It even outpaces countries like India, Japan, and the Philippines.

Premier China assembly services are on par with the best companies in the world. They can compete with companies in the US, Switzerland, and Sweden when it comes to innovation. In January 2022 alone, Chinese companies exported nearly $250 billion in goods.

Chinese companies have vast research potential. They can give you fast and easy access to technology. Moreover, their access to research can give you a considerable edge over your competitors in other countries.

A Legal Environment for Success

Each year, a growing number of companies import Chinese goods. The Chinese government welcomes foreign companies interested in assembly services. The country amends its outsourcing laws continually for this reason.

China works toward improving its infrastructure to ensure efficient outsourcing. At times, the country has spent ten times more on infrastructure development compared to the United States.

Yet, China’s improvements go beyond bridges and railways. The company has also developed its digital infrastructure, supporting the rapid transfer of vital business information.

Like any other industry, however, there are both good and bad elements in the Chinese market.

Challenges of Outsourcing China Assembly Service

If you choose the wrong service provider, you can find they deliver low-quality products. Often, these products won’t meet international standards.

Despite their affordable cost, they don’t offer much value. You must remain vigilant to ensure that your Chinese assembly service produces high-quality products.

You can achieve this goal by conducting regular quality control audits. Alternatively, you can hire a knowledgeable partner in China to conduct regular inspections on your behalf.

IP Protection

In addition, intellectual property rights vary around the world. With this in mind, you must research China’s copyright and trademark system. This task is especially important when a service provider has access to your designs, products, and other trade secrets.

The Chinese government and many national outsourcing companies have strict IP protection measures. Still, a service provider could make copies of your products and sell them at lower prices.

It’s prudent to draft non-disclosure, non-use, and non-circumvention agreements when working with product assembly services in China. These types of agreements will offer more protection compared to a standard non-disclosure agreement.

Verifying Assembly Services

When searching for a China assembly service, you’ll eventually develop a shortlist of potential providers. Before making a selection, however, it’s critical to verify their credentials. By verifying the credentials of a service provider, you can ensure they can meet your outsourcing needs.

For instance, you must check whether a supplier can produce goods according to your requirements. You must also investigate whether they can ramp up production if you choose to scale up your operation.

You must cross-check any information a potential supplier provides. For example, you may need to verify their:

• Business license
• Customs registration certificate
• International trade certificate
• VAT invoices

A reliable consultant can help you verify that any such documents presented by a potential assembly service are genuine.

Gaining an Advantage With Chinese Assembly

If you want to launch an efficient operation in China, it’s in your best interests to partner with a local sourcing agent. An experienced consultant can help you to choose the right China assembly service. They’ll help you to avoid investing your money in the wrong provider.

An experienced consultant can also help you select a suitable city for outsourcing. They’ll also help you to source the legal guidance you need to successfully kick-start your China operation.

Expertise You Can Take To the Bank

A knowledgeable local consultant can help you in many areas. These areas could include:

• Accounting
• Logistics management
• Human resources
• Digital marketing

By partnering with the right consultant, you can lean on them for support in all aspects of your business. Meanwhile, you can remain focused on building sales and managing your native distribution channels.

Moving Forward With a China Assembly Service

Once you’ve selected a service provider, you must create an outsourcing agreement that defines the specifics of your arrangement. For instance, you might outsource product assembly in China.

In that case, the agreement should cover important details, like price per product, production value, and other important elements. You might also highlight terms for special services like just-in-time inventory management.

Your agreement might also cover minimum productivity, working hours, and KPI tracking. It should also specify ways to resolve disputes, dissolve your agreement, and other legal matters.

Most importantly, you must ensure that the meaning of your agreement doesn’t change when translated from one language to the other.

Defining Your Specifications

You must also clearly define your product specifications. This kind of clarity will help you avoid problems.

For example, you must explain exactly what you expect from your outsourcing partner. This explanation might include your product specifications.

You must list and explain even minute details. Furthermore, you must conduct regular inspections. They’ll ensure your service provider implements your instructions correctly.

Getting Your Team On Board

It’s a big decision to outsource your assembly to China. What’s just as important is getting your internal team on board with the change.

For example, you should explain why you decided to outsource assembly to China. You should also explain to every department how they’ll benefit from the transition.

In addition, you should clarify the roles and responsibilities of each team member. In this way, they’ll know how to manage their tasks related to your outsourcing operation.

Monitoring Service Provider Performance

It can prove challenging to monitor an outsourcing partner. However, this challenge becomes intensified when your base of operation is in another country.

It’s vital that your partner works productively. You must find a way to control absenteeism and distractions.

It’s helpful to use performance monitoring software. Companies of all sizes—from small startups to global conglomerates—use productivity management tools.

With this kind of resource, you can track the time that employees work. You can also manage employee performance based on real-time productivity reports. You can also use this kind of tool to assign projects and tasks to outsourced staff members.

Your Partner in Chinese Assembly Services

Now, you have a better understanding of how to use a China assembly service. What you need now is an experienced consultant with strong ties to the best service providers in the nation. Shield Works Mfg. can help.

We believe in building productive long-term manufacturing relationships. When we set out to deliver results, it happens.

Contact us today to learn more about securing your production interests in China.

It’s no secret that China is the world’s factory. The country’s economy has grown rapidly in the past few decades. In fact, its share in global manufacturing output has been growing steadily at around 2% each year.

Its manufacturing goes from textiles to clothing, machinery, electronics, and even electronic assembly. As a result, manufacturers are adopting new technologies that allow them to stay on top of the game. It’s for this reason that China has become a world-class outsourcing destination.

If you’re thinking of joining the bandwagon, you absolutely should. There are many good reasons why you should outsource your electronic assembly in China. If you want to know what these reasons are, keep reading to find the top most beneficial reasons below.

1. Unmatched Expertise in Electronics

Many people are unsure about why product assembly in China is so popular. The answer boils down to the country having access to the resources required for manufacturing. Most manufacturers based in China have been doing this for generations.

They have a wealth of knowledge that surpasses what most other companies from around the world can produce. Does your company need a certain level of quality for its products? Outsourcing electronic assembly work to China would be a good idea.

Their highly skilled workers and advanced equipment mean top-quality production. China also specializes in developing affordable and reliable electronic products. When outsourcing, you get access to a team of seasoned experts that have years of experience in this field.

2. Availability of Different Types of Equipment and Facilities

China is a country with a large number of factories that offer electronic assembly services. There’s a high availability of different types of equipment and facilities. Hence, your company will be able to choose the right manufacturer for your production line.

You can focus on meeting customer demands by offering products manufactured as per their needs. In China, it’s easy to pull off product assembly, whether you need commercial or industrial goods.

3. Large Amount of Products Ready for Shipment Within 24 Hours

The fast-paced world we live in today has seen consumers demand products faster than ever before. As a result, many companies outsource to China because it offers quick turnarounds.

In most cases, companies can have all their products ready for shipment or delivery within 24 hours. This is one of the most significant advantages of outsourcing to China.

4. A Wealth of Materials and Services

China has a large number of suppliers, contract manufacturers, and logistics providers, all of which are necessary for running an efficient production line. Your business will not slow down even if you plan to increase the volume of goods produced for sale.

Companies that outsource their materials to China also get to save on storage space. You don’t need extra storage for materials and excess products. This makes manufacturing in China one of the best strategies.

5. Accessibility and Eco-Friendliness

China has expanded its economy to make it more accessible to people all over the world. This is possible due to low costs and simplified processes through automation and mass production.

Electronics manufacturing is one area where this is very efficient. The best part is that it makes consumer goods available at affordable prices.

For this reason, many countries outsource labor-intensive jobs to China to cut down on labor costs. You see, outsourcing eliminates the need for companies to set up manufacturing plants.

Even better, it’s increasingly eco-friendly. You eliminate the carbon footprint and wastage of materials that would be a result of manufacturing.

6. Quality Assurance and Quantity Control

Outsourced manufacturers are held accountable for providing quality goods and services. This is done by testing every product before it leaves the factories. They ensure that they meet all quality standards during transit and after delivery.

With this system, customers don’t have to worry about receiving faulty units. China is packed with highly skilled professionals that ensure quality control.

Another benefit of outsourcing your electronic assembly jobs to China is quantity control. You’ll be able to produce goods in the exact quantities you want, whether it is 1 or 1000, depending on your budget. With this flexibility, businesses save thousands by not having extra stock lying around.

7. Time Savings and Faster Time-to-Market

Outsourcing electronic assembly to China enables businesses to launch their products faster. Manufacturers in China can meet deadlines due to working at a fast pace. Companies outsourcing to China will have the advantage of launching their products on time.

This means that they can start marketing their goods early and increase sales before competitors even get a chance to enter the market. Furthermore, the turnaround time for getting samples is very short. The process makes it easy for businesses to test products before placing larger orders.

8. Free Trade Agreement (FTA) Benefits

Many high-tech companies outsource their manufacturing to China because of the FTA benefits. These include tax cuts, tariff remissions, and stimulus packages. Companies don’t have to worry about dealing with one country’s tariffs.

No tariffs will apply if they pass through another FTA member nation. At the same time, companies also enjoy zero customs duties on goods sold. This results in higher market penetration compared to non-FTA members.

9. Diverse Product Portfolio and No Minimum Order Quantity

China has one of the world’s largest populations. As a result, they have developed numerous manufacturing hubs. These hubs make it easier for businesses that outsource to access diverse markets.

If there is an increase in demand for one type of product, companies can easily scale up production. In China, facilities are already readily available and production can start ASAP.

Outsourcing electronic assembly to China is also ideal for start-ups and small businesses. They can do so without having to worry about meeting a minimum order quantity.

This allows them to experiment with a new product or design. Moreover, it also allows these companies to create personalized products at affordable prices.

10. Learn from Others’ Mistakes

Outsourcing your electronic assembly jobs saves you from making costly mistakes when entering a new market. Chinese manufacturers have years of experience. They also handle quality control and shipping operations.

They would make minimal to zero mistakes and not compromise on quality. This allows you to benefit from their expertise without worrying about major setbacks.

They have also established long-term relationships with shipping companies in America and Europe. They can negotiate for further discounts when sending goods to your country.

11. Reduced Overhead Costs

Companies that outsource to China can save up to 50% of overhead costs. This is money they would have spent if they were assembling them in their own countries. Low labor costs combined with low operating expenses make outsourcing effective.

Manufacturing in China is also possible because of the logistical efficiencies available. This includes easy access to seaports, airports, railways, and roads.

They make it possible for companies to ship goods quickly. Even when orders increase at the last minute.

At the same time, you can monitor product quality through tracking systems. Tacking in real-time allows you to receive fast feedback on all your production.

12. Lower Capital Requirement

Outsourcing electronic assembly to China leads to lower capital requirements. This is a huge benefit compared with setting up manufacturing plants locally. Because of the inexpensive labor market, it’s possible to hire hundreds of people at once.

This means that large orders are processed with minimal capital outlay. On the other hand, local manufacturing requires large amounts of capital. You have to hire or contract workers individually instead of hiring them by batch.

13. High-Tech Equipment and Affordable Labor

Advanced technologies are available for businesses that outsource their assembly to China. This is because of the availability of high-tech equipment in transferable conditions. The latter allows lower labor costs.

Electronics manufacturing jobs are being replaced by automation. It allows manufacturers to reduce costs further. In this way, companies can keep up with the competitive market without spending a lot.

14. Competitive Advantages and Business Growth

Businesses find it difficult to compete with bigger companies. However, by outsourcing their electronic assembly jobs to China, they can gain a competitive advantage. This is because of lower labor costs and proximity to the market.

Lower labor cost means that businesses have more affordable products than larger competitors. Having a warehouse in China means selling products to competing businesses at lower prices.

Outsource Electronic Assembly to China

Outsourcing electronic assembly can allow companies to focus on developing new technologies. Companies that outsource product assembly in China are able to benefit from the country’s massive market while still complying with their own innovation demands.

Are you ready to outsource your electronic assembly to China? Shield Works is the answer. We offer high-end electronic manufacturing services to businesses around the world. If you need a quote, simply contact us here.

The OEM industry ships over 1.9 trillion dollars of goods every year, huge right? There are plenty of reasons this type of manufacturing is so popular.

OEMs (original equipment manufacturers) are an essential component of modern industrial production. Whether you’re considering a phone, car, or even your beauty products, chances are they contain OEM products inside them.

The majority of the things we use daily come with OEM parts. However, these enterprises primarily operate in the B2B sector. This means most consumers are unaware of their importance.

OEM manufacturers may save money and time. Third-party components allow a company to focus on its primary business. They no longer need to focus on each secondary or internal item.

If you want to learn more about OEM, read on.

What is an OEM, and How Does It Work?

Initially, the term Original Equipment Manufacturer (OEM) referred to a firm that sold equipment to another company for resale or incorporation into their equipment for sale.

The term “OEM” currently refers to a product obtained by a firm to reuse or incorporate into another product under the reseller’s brand name.

This could mean the entire product is from an OEM manufacturer. The end business simply labeled the product with its branding. Alternatively, the OEM parts are a few components inside a product.

The OEM is the firm that creates subsystems or components that other companies utilize to make the final product. For example, not all of the features in a Lenovo laptop computer are made by Lenovo. Some components, such as the CPU or memory module, may be the work of an OEM.

OEM manufacturers are not the same as value-added resellers or VARs. A VAR is a corporation or organization that purchases an OEM component, part, or product and either enhances or adds extra details. They do so to raise its value before selling it directly to customers.

VARs and OEMs collaborate. OEMs create sub-assembly parts for VARs to sell. Some OEMs produce entire things for VAR distribution, meaning they directly influence the final result.

For example, if your product can handle medical problems, a VAR may bundle it with other goods for health providers.

Why is OEM Important?

A manufacturer or reseller can cut expenses by cooperating with an OEM. Companies are not required to construct manufacturing facilities or manage OEM manufacturing in-house.

They incorporate OEM components from China, India, or other countries with cheap manufacturing.

Typically, the cost savings pass on to the client who purchases the bundled product or system.

Managing many products, systems, and providers may be difficult for the end-user. The technical support and maintenance model expands dramatically when an organization embraces new technology. There might be dozens of OEMs and third-party companies servicing their hardware products.

Companies can decide to involve a third party to connect with and maintain relationships with OEM manufacturers. This makes the process smoother. A consolidated support and service approach helps many firms decrease OEM and vendor complexity.

How is an OEM Product Developed, Partnered With, and Resold?

Before offering a product to end-users, businesses determine the best strategy to meet the demands of their consumers.

By collaborating with an OEM manufacturer, a company may:

• Decrease manufacturing investment
• Decrease production costs
• Decrease material expenses
• Obtain knowledge in product design
• Have a shorter production life cycle.
• Still develop products employing best-of-breed components
• Focus on branding

OEMs can add everything to the product and brand it with their logo. Other OEMs merely supply components and do not sell products under their name. However, many businesses do both.

These items are often available for purchase straight from the firm as well.

The OEM Manufacturer Sector

In the hardware sector, an original equipment manufacturer (OEM) is a firm that creates a product for end customers, such as a PC, laptop, or printer. Original equipment makers include Apple, HP, Dell, Canon, and Brother.

On the other hand, OEM hardware refers to the components that comprise the items mentioned above. It includes CPUs, fans, motherboards, memory chips, hard drives, and other features. Companies that manufacture these components offer them to OEMs as OEM hardware.

The hardware sector of the computer business is even more well-known for OEMs. Hard drives, graphics cards, and CPUs for retail goods are built by a small number of firms, with market leaders such as Intel dominating.

For example, hard drive manufacturers provide bare hard drives for OEM customers. they also provide retail hard drives that come in a box with peripherals such as cables and installation instructions.

OEM hardware is often less expensive than retail versions. However, there are certain drawbacks. Most OEM hardware lacks customer support. It also has limited guarantee terms and is not easily integrated with other components of whatever system you’re building.

DVD drives, for example, may be missing cables or ribbons that connect to the motherboard.

It is because OEM hardware is primarily built for resellers. Those manufacturers must include:

• Warranties
• Technical assistance
• Other components when constructing complete systems

Other OEM Physical Products

There are tonnes of other industries that OEM products. These include but aren’t limited to sectors such as:

Machined goods – OEM manufacturers can often build parts to scale, these can include things like shims, nuts and bolts, rotors, and other metal or plastic components for machinery.

Auto – Car companies do not build every single part of their car in their factories. They often use OEM manufactures for computer chips, audio components, door trims, etc.

Tools – Whether we are talking household or industrial tools, OEM parts are frequently used. Motors, drill bits, and casing are all examples of how tools use off-site manufacturing.

Household products – You may be surprised to find that many of your branded household products are actually OEM or contain OEM parts. Everything from pottery, to TVs and kitchen appliances, may use this industry to drive costs down. 

Beauty products – Many beauty companies do not make containers for their product, they often have them shipped in from an OEM manufacturer.

Musical instruments – Piano wires and guitar strings, tuning pegs, piano keys, and any other small part on musical gear are often OEM manufactured.

Original Equipment Manufacturers (OEMs) Provide Replacement Components and Spares

Some parts of all products are more prone to wear and tear than others. Companies frequently maintain a continual supply of vital spares on hand for their essential assets. These stockpiles get renewed regularly.

OEMs are the most outstanding providers of equipment parts and replacement components.

OEMs Provide Aftersales Assistance as Well as Maintenance and Repairs

On top of quality testing, certain OEM providers may also provide continuing maintenance services. They do so as part of an after-sales support package. When working with highly specialized equipment, the on-site maintenance personnel may lack the essential skills or instruments to perform the necessary maintenance tasks.

The maintenance contract determines the cost of these services.

Keep in mind that many OEM manufacturers do not offer all of the above services. Choosing vendors that do not provide enough documentation or a consistent supply of spares might raise your maintenance expenses and increase the risk of unplanned downtime. When selecting maintenance contractors, make sure you conduct your research.

OEM Vs. OE Parts

OE is an abbreviation for Original Equipment Manufacturing, the same as “OEM.” Both OE and OEM components are equivalent since they are manufactured following exact requirements. The only difference is that a different company manufactures the OE components.

Consider an OEM automobile component for a Mercedes made in-house by the firm. The OE variation of the same element might come from a Mercedes-licensed auto parts subcontractor, such as Hella Behr.

The genuine Mercedes logo will have the same build quality and dependability as the original product. OE spares are often less expensive than OEM spares.

OEM Vs. Aftermarket Parts

Aftermarket components are produced by firms that are not affiliated with the OEM. Various companies are active in manufacturing aftermarket replacements for OEM spares, particularly in the automobile sector. 

Moreover, aftermarket components have a lot of appeal since they may be up to 60% less expensive than OEM or OE parts. However, that cost comes with significant drawbacks regarding quality and dependability.

OEM/OE spares from various vendors will provide a comparable degree of dependability. However, you do not have this warranty with aftermarket components. There are many possibilities from obscure producers with wildly varying quality.

Some high-priced aftermarket solutions provide performance and durability equivalent to OEM parts. Unfortunately, this is an exception rather than the rule. The great majority of low-cost replacements have a short guarantee and are of poor quality.

It is preferable to use OEM/OE components for essential purchases.

How are OCM and OEM Parts Similar?

OCM components are another sort of named part that appears, particularly in foodservice maintenance. Components distributed through equipment manufacturer networks and authorized service providers are generally known as OCM (Original Component Manufacturer) or direct source parts. 

These are the identical parts used in the original equipment. It implies that referring to a component as an OCM part is practically synonymous with referring to it as an OEM or OE part.

OCM components are also known as original parts. In many circumstances, the term “original parts” refers to OER components (original equipment replacement parts) and may not be identical to OEM parts.

Why are OEM Products Less Costly?

OEM products are often less expensive due to economies of scale. Because the firm collaborates with others to produce huge quantities, both the price and the manufacturing time significantly decrease. 

When you buy a product from an OEM, you should always double-check what you’re buying. While the goods are less expensive and provide the same features and performance, you may not receive some “extras” such as tech support, generally handled by a retail business.

What are Genuine Parts?

Genuine components are typically leftovers from previous production runs. The OEM packages and resells them as replacement components.

Genuine replacement or genuinely made components vary slightly from genuine parts. Genuine replacement parts are typically available after a product’s production run. But they are not leftover components.

They are usually the same or equivalent to the original OEM components. Usually, they’re manufactured by the same OEM parts source.

Genuine replacement parts, in many aspects, are similar to any other spare parts. They are supplied by the maker of the original finished product. Even if they are not identical, they are more likely to be of the same quality as OE components.

Benefits of Purchasing OEM Products

There are some across-the-board benefits you will have when you buy OEMs. These include:

Good Quality

An OEM product is the same as the original manufacturer’s product. Although there are less expensive alternatives, the price of the OEM product reflects its quality.

Durability

Such things are often not just of high quality but also long-lasting. For example, when purchasing a spare tire, an OEM tire is usually preferable to an aftermarket tire since one can be sure of the materials utilized in its manufacture.

Lifespan

OEM parts often last longer than aftermarket parts. They are also designed to fit with the end product from the start.

Move Forward with OEM Manufacturers

Do you need manufacturing services but don’t know where to look? Relax! Our OEM platform Shield Works is here to help you get started.

Now that you know what OEM manufacturers do, check out the rest of our blog to learn more about how we can help your business. Or, get in contact with us today to get cracking on your manufacturing needs.

Your business’s intellectual property (IP) is essential to your company. You invest a lot of money and resources in your employees and the assets of the business and their resulting creations. The biggest asset you have as a business is the mindset of your talent base, which holds significant business value for many years down the line.

Once your IP is open to the public, it’s easy for other people to copy it. This is why businesses should take intellectual property protection seriously. While you’re not obligated to consider the safety of your business’s IP, it could save you thousands of dollars and a significant amount of time in the future.

Unfortunately, most start-ups and mid-sized businesses often take IP protection for granted. Overlooking this aspect of your business will lead to significant regrets later.

Are you still unconvinced about the importance of intellectual property protection? Read below to understand more about intellectual property protection and why it is important:

What Is Intellectual Property?

IP refers to intangible assets such as ideas that are legally protected and owned by an individual or a company. The property is protected from external use and implementation without permission. An intangible asset is referred to as a non-physical asset that is owned by a person or a business.

The main concept behind intellectual property is that certain products of the human intellect should be legally protected and owned in the same way as physical properties. Most countries with developed economies have strict rules to protect these forms of property.

There are several types of intellectual property, including:

• Trade secrets
• Franchises
• Trademarks
• Copyrights
• Patents

Intellectual property is owned by the creator of the work, or by an individual deemed the owner. However, this can differ in certain circumstances where different types of intellectual property ownership are determined differently.

For example, if an idea comes from an employer, they become the owners of that IP. However, if it comes from an employee under contract, it can be registered under the employer. Keep in mind that IP ownership is transferable from one individual to another.

It Protects Your Exclusive Rights

IP protection gives your business exclusive rights within the jurisdiction where it’s registered. This means you will have the right to your design, brand name, and invention. The good news is that other people can’t directly benefit from your IP or reap any financial benefits from counterfeits of your brand.

IP protection also helps you protect your business from reputational damage, often caused by malicious people producing substandard products in your name. This gives your business the competitive edge it needs to compete with even major brands on the market.

It Prevents Other People from Using Your Goodwill and Branding

Crafting, protecting, and maintaining a great online and offline brand is a costly endeavor for most companies. Therefore, it’s essential to take the right steps to protect your brand and ensure it’s not at risk. Make sure you get started immediately when establishing your brand.

Most businesses often make the mistake of waiting until they have a larger budget to put in place IP protection. This is a mistake that could cost you thousands of dollars. This is because most of these businesses often forget about the process until someone else steals their IP.

The first step towards protecting your intellectual property is registering it. Ensure you register your trademark, invention, or design to protect your company’s unique identifiers. Through this, you will be taking active steps towards protecting your business’s distinct personality and discouraging other individuals from using it.

As such, if anyone tries to use your business’s registered IP, they will likely be infringing on your rights. This means you can sue them and claim intellectual property infringement.

Therefore, you can defend your company’s rights to use the IP and take the other party to court. You can even receive damages from the infringing party or a percentage of the profits they made in the infringement process.

It Adds Value to Your Property

Are you looking to stay ahead of the curve in the assembly and manufacturing industry? Then obtaining your IP rights is the first step to doing so. Securing your IP rights will proactively increase your company’s market share.

It can also help you win your customers’ loyalty by keeping them loyal to your brand. Your company logo, name, and the products or services you offer your clients are fundamental parts of your branding. This is what sets you apart from your competitors, making your business stand out.

Therefore, it’s essential to make sure your business uses these intangible assets to get ahead of the game by protecting them. Different intellectual properties and creations can be protected in varying ways. With the right advisors and team, it will be easy to efficiently protect your IP at each step of your business’s development stage.

Intellectual Property Protection Helps You Raise Money

Intellectual property protection can create a profit-generating asset for your company. This means you can raise money by selling your IP or licensing it.

When you own the intellectual property rights to a brand or a creation, you have the freedom to use it however you want. You can even transfer the rights to other companies or individuals. This can be an extra revenue stream for your business through earning royalties by licensing your IP or selling the rights to another individual.

Knowing how to fully take advantage of your IP is essential to protecting your IP. Some financial institutions highly regard IP rights, and they can be a form of security for numerous loans in some cases.

It Protects Business Growth

As a small business, it’s essential to protect your company’s unique services or products that you own. In some cases, competitors use other businesses’ success to take away a chunk of the market share. It results in reduced revenue and slow business growth.

Losing your market share early in the company’s development stage can be quite overwhelming and devastating. It’s also stressful and time-consuming to start chasing the guilty party if you don’t have any legal protection. This could result in losses and even business closure if not appropriately handled.

Keep in mind that no one else is responsible for checking if your IP has been infringed. You should always check to ensure that no one else in the market uses your assets to make a profit or discredit your brand. Even major companies have had to deal with IP infringement at some point in their development journey.

Protecting intellectual property is directly related to your business growth. It’s the only way to ensure that your business is protected throughout the development stages.

It Protects and Secures Your Business Ideas

When you have a unique and great idea for a service or product, there are always individuals who will try to duplicate and sell the idea as their own, making a profit in the process. Depending on your circumstances, you could use trademarks, copyrights, or patents to protect your ideas. All these are instrumental in covering different areas of intellectual property.

Without proper consent, IP protection can help you prevent your competitors or any other individual from making a profit from your ideas. This protection should apply to companies of all sizes.

We have all seen billion-dollar companies having their ideas infringed upon, which leads to costly lawsuits. A great example of this is the Samsung-Apple dispute about their smartphones.

IP Protection Is an Easy Process

While the intellectual property protection process may seem daunting, stressful, and time-consuming, it’s easier than most people think. Likewise, the time, effort, and resources you use to protect your IP are well worth it.

While it’s not feasible to protect the idea by itself, you can secure the processes and means by which you put your unique idea into operation. This is what you will protect using IP.

On the other hand, copyright doesn’t require any actual registration procedures. That’s because the protection is automatic and free. While copyright doesn’t protect your idea, it will cover how the concept is presented, for example, on flyers, websites, presentations, and brochures.

If you’re looking to protect your intellectual property by registering a design, applying for a patent, or trademark, you can do this through your local intellectual property office. You can do this on your own or with a solicitor.

Contact Us for Intellectual Property Protection Today

Do you have a company in China? If your company doesn’t file its patents, trademarks, or copyrights in China, the IP will have no formal protection. Contact us today at Shield Works for all your intellectual property protection needs in China.

We work with a top Zhuhai-based IP industry expert to offer our clients IP protection services to cover all their needs.