Original design manufacturer
This article relies largely or entirely on a single source. (June 2012)
An original design manufacturer is a company that designs and manufactures a product, as specified, that is eventually rebranded by another firm for sale. Such companies allow the firm that owns or licenses the brand to produce products (either as a supplement or solely) without having to engage in the organization or running of a factory. Original design manufacturers have grown in size in recent years and, as of 2015[update], many have the scale to handle production in-house for the products that are branded by the buying firm. This is in contrast to a contract manufacturer.
This model is especially used in international trade, where a local original design manufacturer is used to produce goods for a foreign company that sees some advantage in the transaction, such as low labor-inputs, transport links or proximity to markets. Innovative and/or patented technologies developed/owned by the original design manufacturer are another cause for this product distribution model. original design manufacturer models are also used where local ownership-laws possibly prohibit direct ownership of assets by foreigners, allowing a local firm to produce for a brand company - either for the domestic market or for export.
This type of business is part of "outsourcing". For example: Compal Electronics makes notebook computers and monitors, and operates as a mass producer for numerous brand companies, assisted by low labor-costs, low-cost transport, and the near-commodity nature of the physical inputs (in Compal's case, computer components). As of 2011[update], Taiwanese original design manufacturers made ninety-four percent of all notebook computers. Some companies such as Flex and Wistron are both original design manufacturers and providers of Electronics manufacturing services.
Post-2016 Nokia phones (HMD) is an example of a firm which relies on original design manufacturers. In late 2019, it switched from relying on only one original design manufacturer to multiple original design manufacturers.
- White label product
- Product rebranding
- Electronics manufacturing services
- Original equipment manufacturer
- Contract manufacturer