At present in the electronics industry, OEM, EMS and ODM model boundaries become increasingly blurred. ODM and many companies are in EMS category with its clients to design or joint design products, and there are many disputes in determining the ownership of IP. Also have ODM companies began with their own brand products, this practice is known as "OBM", namely "made its own brand". While some OEM, especially in China, when it has excess capacity, also provide EMS service to overseas OEM company.
China EMS/ODM to the value chain. In China there are many outsourcing model, such as OEM company in excess capacity, provide to other OEM EMS services; Local EMS company, with the increase scale, started to develop its own brand business. Therefore, calculation of China outsourcing service market scale is not easy. TFI recently published report of local EMS/ODM industry to a classification of the Chinese electronics companies, including the global OEM, EMS, ODM, electronics manufacturing and design services provider in China and the Chinese OEM, etc. The report is expected in 2005 China EMS/ODM combined revenue of about $38.3 billion.
The report also pointed out that China’s electronics company, going forward to the product value chain, they hired hundreds of research and development engineers, to provide customers more and more technical solutions and innovative products. China EMS/ODM company’s advantage in price, accept small contract ability as well as the local infrastructure. But they are in communication, quality control, and IP disadvantage. Some China EMS/ODM firms use American or European offices, or from silicon valley hiring sales personnel and the manager to solve these problems.
In the global industrial chain transfer to China at the same time, China’s electronics company, also direct efforts to expand overseas. At present, they mainly has three ways: one is for less developed markets such as southeast Asia, Russia and Africa, using low price strategy to permeate, such as zte and huawei. They first use government preferential policies and local sales channels to achieve scale, and then reuse these abilities into global competitors neglects of the market. In this way, Chinese OEM not only expand the sales revenue, and gained valuable experience in the international market. 2 it is through the establishment of overseas r&d center, factory assets localization, to penetrate the western market. Haier is the most typical example, in 2002 in the United States to local building design, sales center and manufacturing plant. Three is a distribution alliance with a well-known overseas brands or joint venture, with the help of a partner’s resources to expand overseas markets. The production close to the final market, in order to obtain the flexibility and reduce the transportation cost again recently by EMS and ODM company in the world.