What is OEM?

If you often buy goods, you certainly know the OEM product. However, not everyone is familiar with this item, the following article will help you understand the basic information about OEM and the difference between OEM business model and traditional business.

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What is OEM?

OEM stands for Original Equipment Manufacturer - Original equipment manufacturer. OEM refers to products manufactured by the company according to the design, specifications are reserved by another company. Put simply, OEM products are products manufactured by a company and marketed under the brand name of the company that makes the product.

What is OEM? Picture 1

OEM goods are genuine products, but the parts and machines are imported separately from the genuine factory by each part before the company orders to assemble the finished product.

The ordering company must update and inform the quantity and product requirements to the manufacturer. Meanwhile, manufacturers are only allowed to assemble, not arbitrarily sell OEM products to the market as a single product.

The most practical examples are Apple and Foxconn. In particular, Apple is the customer, responsible for technology research and product distribution, while Foxconn will be the manufacturer of the product. Foxconn is an OEM company.

Advantage in comb OEM

The difference between the form of OEM business and traditional business is in the production stage. With the OEM method, the initial investment cost of a business may not be large because it can bypass all or part of the production process. This makes most OEM products priced lower than regular products.

It is the above characteristics that have brought many advantages to the business model based on OEM model.

1. Companies can deploy and come up with many different business ideas.
2. Easy to put many products and business ideas into test so that they can penetrate the market quickly.
3. OEM companies have access to the research and new technology the company holds. Therefore, ordering companies need to choose a reliable manufacturer and supplier to avoid technology theft.