After so many years in the industry, I often hear people say that "the ceramics industry is disrupted by OEM."
What is OEM? It refers to a manufacturer producing products or product accessories according to the requirements of another manufacturer. It is also called OEM production or authorized OEM production, commonly known as OEM processing. There are two main forms of OEM (Original Equipment Manufacturer) and ODM (Original Design Manufacturer). Party A brings its own technology and design and lets Party B process it, which is called OEM; Party A likes Party B's products and lets Party B produce them using Party A's trademark, which is called ODM.
As we all know, Nike is an OEM manufacturer, and Apple is also an OEM manufacturer. Their OEM is a typical OEM. They master the core technology and design themselves and find OEMs for production. When Apple is OEMed by Foxconn in China, it will be fair and square, but it will be marked "Designed by Apple in California Assembled in China" on the back of the product. Products sold in China also have the "Made in China by Apple Inc." logo.
Why do consumers still flock to Apple and Nike even though they know they are OEMs?
And for the same ceramic tile OEM, why are many people in the construction and ceramics industry labeling it as disrupting the industry?
Zhongtaojun believes that this is because most of the OEMs in the building ceramics industry are ODM models.The contractor, the so-called OEM in the industry, does not have core technology and design advantages at all. They only follow the principle of finding OEMs whoever is cheaper. That is, the OEMs do not have advanced design and manufacturing capabilities.
Combining the information obtained from China Ceramics Network’s terminal survey and daily visits to enterprises, in-depth exploration shows that there are at least three major hazards in OEM.
Hazard 1: OEM Turned into a fake
Tracing back to its origins and history, the OEM industry in the ceramics industry was born in Zibo, Shandong. It was around 2003, when the Foshan brand was already quite influential. For the same product, the price of the Foshan brand was much higher than that of the Zibo brand. Seeing business opportunities, some building materials manufacturers registered brands in Foshan or rented Foshan brands, and went to Zibo to seek cooperation. Through ODM or OEM model production, they turned into OEMs and opened the OEM model for Zibo's building ceramics. In recent years, as the Zibo production area has been affected by the environmental protection crisis, OEMs have had to move to Jiangxi Pangao'an and other production areas to pursue new OEM business opportunities.
It can be found that the biggest characteristic of such OEM is opportunism, using the strong influence of the Foshan brand to mislead consumers, making them think that the ceramic tiles produced by the OEM are authentic ceramic tiles produced in Foshan. What's more, some companies were "inspired" by it and turned the OEM into "counterfeit", pretending to be Foshan brands to produce and sell ceramic tiles. You are not a serious brand and have no advantages, so how can you do a good job in OEM?
Hazard 2: Will reduce costs It reduced the quality
Of course, in addition to OEMs, there are many strong Foshan companies and brands in the ceramics industry who are OEMs. Because the brand is big and has good sales, the market is in short supply. In view of the limited production capacity and not all categories, especially supporting products, are produced by ourselves, in order to save manufacturing costs, large companies and brands will use the OEM model. As long as the quality of the OEM product passes the standard, there is nothing wrong with it. However, quality control has become a major problem due to common reasons such as backward management in the ceramics industry. Good OEM has become synonymous with substandard quality.
What is puzzling at first glance is that some large enterprises and brands in Foshan, which have high-profile propaganda that they have sufficient production capacity, rich product lines, and highly intelligent production lines, will also OEM. They just posted it, but they didn't dare to disclose the fact of OEM. They even kept it secret from their own dealers and firmly denied that they were OEM. The products were all authentic Guangdong bricks. If you think about it carefully, it is not difficult to find that its OEM is purely a powerful means to deal with the fiercely competitive price war, either to expand retail channels, to seize the complete decoration channel, or to attack the fine decoration housing (project centralized procurement) channel.
Can OEM win the price war? Why do you still need to OEM when you can produce everything yourself and have sufficient production capacity? There is only one answer: reduce production costs. Our own scale advantage cannot reduce production costs, but instead, OEM companies that are not as powerful as ourselves can do it? There is only one truth: reduce quality, thereby reducing costs.
Hazard three: turning benign brands into Competition has turned into vicious price competition
Under the influence of Hazard 1 and Hazard 2, the building ceramics market is flooded with a large number of low-priced OEM products, including some products with large brands and low prices, which are much cheaper than many intermediate brands. They have become the pride of some dealers. A "sharp tool" for the market. But most consumers are unaware of this. The temptation of low-priced products is huge, and the charm of Foshan brands is huge. Human nature is greedy. People just want to spend as little money as possible and buy the most famous brands as possible.
Over time, the originally benign brand competition turned into vicious price competition. The non-OEM brands were ruined by the abusive OEM brands, and the market was disrupted by price wars. Relevant people in the industryWhat people, especially non-OEM companies and their dealers hate the most, is the harm caused by OEM.
However, everything has two sides and we need to look at it with a dialectical perspective. Although OEM brings harm, it also brings benefits.
Speaking more broadly, OEM production is an advanced production collaboration method with a long history. It has played an important role in the industrialization process of capitalist countries and will continue to play a positive role in rational division of labor and effective use of social resources in modern society. On a smaller scale, OEM has benefited three parties: First, it has solved the big problem of OEMs without production capacity and enterprises with insufficient production capacity; Second, it has greatly promoted the development of production areas such as Zibo that lack advantageous independent brands and strong sales channels. development; third, it satisfies the desire of some consumers to spend small money to buy big brands.
As for why consumers are willing to spend money to buy OEM tiles, the answer is actually very simple. In the terminal survey, a dealer of a certain brand told reporters from China Ceramics Network that consumers who choose to buy OEM ceramic tiles have already recognized the more influential Foshan brands in their hearts. As long as the quality of their OEM ceramic tiles is decent, whether they are OEM The brand does not matter; besides, if no one points it out, it will be difficult for consumers to tell the difference between ceramic tiles from other production areas and Guangdong bricks.
Currently, the building and ceramics industry is facing difficulties such as high pressure on environmental protection, overcapacity, and channel fission, and OEM is also deeply affected. So, looking to the future, does OEM still have a future in the ceramic construction industry?
As the reshuffle of companies and brands intensifies, the concentration of the building ceramics industry will become higher and higher, although a large number of companies and brands will be eliminated, including OEMs and OEM-based companies. By then, there may be only dozens of large companies and brands left in the building ceramics industry. However, even if the market shrinks, it will still be huge. The surviving large companies and brands will inevitably encounter the problem of insufficient production capacity. The OEM companies that come down will undoubtedly win broader development space.
Zhong Taojun still remembers that when he went to Jiangxi Pangao'an production area for investigation in March this year, several bosses of local companies He and a professional manager once said, "non-Guangdong production areas such as the Pan-Gao'an production area have missed the best period for brand development. Perhaps, focusing on manufacturing based on OEM production and building regional manufacturing brands is the key to these production areas." Best way out”.
Continuously improve the level of manufacturing and intelligent manufacturing, while ensuring the quality of OEM productsUnder the premise of strictly controlling production costs and making OEM products as good as the original brands, who would resist such OEM tiles? What's the problem even if the origin of such OEM tiles is not in Foshan?
