How to change the situation for Chinese OEM cellphone manufacturers competing for orders of null profit

4 comments Monday, April 20, 2015

After years of fast expansion and building up mobile phone production lines with a huge number of money, some local OEM manufactures from the southern part of China are realizing that the market is hitting saturation and need to lower their price points just to remain competitive.

It's seemingly that the situation of these local OEM factories is not cheerful. News from ZDnet years ago indicates, some of OEM manufacturers from Shenzhen and Dongguan, in which China's OEM businesses are commonly located, were competing for orders in very low price even if the profit is to null. 

ZDnet took an example: One OEM factory owner, surnamed Li, told Guangzhou Daily in a report the gross margin previously for manufacturing a feature phone priced at 200 yuan (US$32.6) was at least 2 percent. These days, though, if the order is huge, he said he was willing to lower his profit to only 1 percent to secure the order. In spite of this, Li last month failed to obtain an order from Vietnam. This contract, for the production of 400,000 mobile phones, was awarded to his competitors in Shenzhen which offered a deal that gave them earnings of only 0.02 yuan (0.3 US cent) for each mobile phone manufactured, or US$120,000 for the whole production. 

The case in the news report might happen from time to time: two or more OEM factories competed for one order and only one got this order at a lowest price and nearly earned nothing from this order, only to pay the cost of the mobile phone production line and labor, to keep up with the company's daily operation, then waited for another chance. 

OEM/ODM manufacturer

In order to change this situation to get more orders, the OEM manufacturers needs to find ways to enhance the market performance and reduce production cost. Besides the intercompany methods to improve their own competitiveness to compete with foreign brands, the exterior environment and platform might be more helpful. is started to change this situation for all OEM mobile phone manufacturers. It is the biggest platform devote to building a communication bridge for both OEM cellphone manufactures and global customers. In the past, several OEM makers competed for one order of hundreds of thousands of mobile phones from one company, they would disregard the small quantity orders because the money earned from small quantity orders can't cover up the cost of phone production line and labor. At the other side, the customers only want to customize several hundreds or thousands mobile phones, but cannot find any OEM manufacturers would like to acquire this order. 

Now platform gaps the customers' needs and OEM factories' production capacity. On the platform, customers place an order based on their own need, no matter the order is big or small. The will gather all the orders information and integrate OEM manufacturers resource to produce the mobile phones as customers' need. For OEM manufacturers, they don't need to find or compete for one order, they can choose orders according to their own production capacity, one big order or several small orders. not just helps global customers reducing costs, improving efficiency, accelerating the turnover capital, as well as expanding business scales and achieving the common development goals, but it also helps OEM manufacturers saving time and energy to find or compete orders, focusing on mobile phone productions.

OEM , ODM , mobile phone , smart phone , manufacturers


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