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The strategy of cosmetic OEM processing and the internationalization of Chinese enterprises

  • Categories:Industry News
  • Author:admin
  • Origin:
  • Time of issue:2018-11-19 16:20
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(Summary description)In the process of internationalization of Chinese companies, they should combine their own cost advantages with the brand advantages of foreign companies and implement OEM strategies.

The strategy of cosmetic OEM processing and the internationalization of Chinese enterprises

(Summary description)In the process of internationalization of Chinese companies, they should combine their own cost advantages with the brand advantages of foreign companies and implement OEM strategies.

  • Categories:Industry News
  • Author:admin
  • Origin:
  • Time of issue:2018-11-19 16:20
  • Views:
Information

In the process of internationalization of Chinese companies, they should combine their own cost advantages with the brand advantages of foreign companies and implement OEM strategies. However, the current cost advantages of Chinese enterprises are temporary and unstable. They should focus on economies of scale, supply chain management, technological innovation, and corporate culture to create sustainable cost advantages. At the same time, it is necessary to recognize the pros and cons of OEM strategy, and use OEM to cultivate and maintain its own brand and build the core competitiveness of the enterprise.

 

The advantages of cosmetics oem:

 

Why is OEM so popular all over the world?

 

This is due to the socialized division of labor in production. In the industrial society, because of considerations such as manufacturing costs, convenience of transportation, and saving development time.


Under the fierce competition in the surplus economy, why are production-oriented enterprises increasingly inclined to abandon free brands and choose OEM-OEM production? The profit dispute between middlemen-commercial enterprises and production enterprises is an indisputable fact. When sellers have a deep and wide pattern in the market, they will naturally squeeze their profit margins to production-oriented enterprises, especially those small and medium-sized production companies are facing a very serious fact. , Either stick to its own brand and wait for it to die, or choose an intermediary brand to survive.


From a global perspective, only a few production-oriented companies have survived on the road of adhering to their own brand development, while more companies have tasted the sweetness after docking with the dealer’s brand.


OEM benefits:

 

1. OEM can reduce production costs and avoid unnecessary capital investment. The obvious production cost advantage of OEM lies in the supplier's existing production capacity, cheap labor, extensive knowledge structure that can improve production efficiency, and other processing professional details. By reducing production costs in this way, companies can maintain a competitive price advantage in fierce competition while increasing their economic profits. As an OEM demander, by entrusting OEM suppliers who already have production equipment or responsible for providing production equipment and their cheap labor to produce the products they need, there is no need to invest in fixed assets and pay high labor costs for production. , Can also obtain low-cost advantages through OEM processing of traditional products, while focusing on the research and development of new products to maintain their traditional advantages.


2. Because it reduces the occupation of production funds by commissioned enterprises, it reduces the risk of market expansion. Compared with self-paving, mergers, joint ventures, and mergers, OEM entrusted processing occupies the least capital for brand companies. Improve the speed of brand enterprises' new products entering the market. "OEM" is a good choice to quickly occupy the market in the short term. It is a good choice to effectively reduce risks without losing the market.


OEM also has risks

 

(A) Legal risk

 

The OEM contracts between our domestic companies are too crude. Foreign brand-name agreements often have a thick copy, from equipment to technology, from standard to quality, from accessories to complete machines, from price to market, from service to maintenance, from delivery cycle to accessories supply years, from From payment to delivery, from inspection to acceptance, we have made very complete requirements to prevent the slightest failure. However, domestic enterprises often do it overnight. This situation can easily lead to increased disputes and conflicts that are difficult to mediate. Therefore, in the operation, we must be careful not to break the contract to take the market and to be shoddy.


 (B) Economic risk

 

Insufficient market forecasting ability. Due to Party A’s insufficient estimation of the market and its own distribution capabilities, Party A cuts orders, and Party B, due to the inertia of Party A’s plan, is difficult to turn around after the market has changed dramatically, resulting in a large backlog of parts and raw materials for Party B. Funds are taken up. Party B's production stability is poor, it is difficult to independently control its own destiny, lacks the stamina for development, and more importantly, it makes less profit. For example, the American "Barbie" toy enters the Chinese market at a price of 329 yuan, and a Chinese manufacturer that processes it only costs 4 yuan for each one processed.


(C) Brand risk

 

Branded companies must be very careful when choosing manufacturers. They must choose those partners with strength and trustworthiness to ensure the quality of their products and enhance their competitiveness in the market.

 

In this case, OEM can feed the enterprise, but it does not necessarily make the enterprise eat well. Because in the development, production, and sales of the product, the profit of the production link is the lowest. When some companies place orders, they will push the price to a very low level. Although the order is large, the profit is very thin, and there is no room for growth. Moreover, when a certain company receives a large order from a certain brand, the factory's production capacity for a certain period of time is also bought out. In this way, its own products cannot be produced, and its brand's influence in the market will be weakened or even disappear.

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