An Original
Design Manufacturer (ODM) is a company which manufactures
a product which ultimately will be branded by another firm
for sale. Such companies allow the brand firm to produce (either
as a supplement or solely) without having to engage in the
organization or running of a factory. ODMs have grown in size
in recent years and many are now sufficient in size to handle
production for multiple clients, often providing a large portion
of overall production. A primary attribute of this business
model is that the ODM owns and/or designs in-house the products
that are branded by the buying firm. This is in contrast to
a Contract manufacturer or CM.
This model is especially used in international
trade, where a local ODM is used to produce goods for a foreign
company which sees some advantage in the transaction (such
as low labor inputs, transport links, proximity to markets,
etc.). This is also used where local ownership laws possibly
prohibit direct ownership of assets by foreigners, allowing
a local firm to produce for a brand company for either the
domestic market or export.
This type of business is part of 'Outsourcing'.
An example is Compal Electronics, which makes notebook computers
and monitors, and operates as mass producers 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).
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