From an objective view, multinationals can avail of the advantages through the method of OEM. To be specific, large multinationals naturally possess the ownership advantage including unique mature technology or knowledge property. Through the search for OEM enterprises overseas, multinationals take advantage of local essential elements and investment surroundings to localize their products. In this way, production cost is decreased.

 
    OEM: Important Steps of globalization for China Enterprise

    In the wake of OEM, China enterprises are inevitably involved. OEM in China are mainly divided into two kinds: one is OEM/ODM for multinationals  and products are sold overseas. The other is to produce and sell products in China. The former form makes up the main body of our processing business. The later one is becoming the main approach to occupy and expand China market. At present, OEM products are nearly everywhere in the consumption market from clothes, toys, to home appliance and structural materials. In recent years, 400 enterprises of 500 top strong businesses in the world have moved their assembly lines to China. The big giants of world clothes such as Pierre Cardin and Valentino produce most of their products in Guangdong, and Zhejiang province, China. Furthermore, 60% of Nike sports shoes are produced in China and Nokia now has 5 production bases in China mainland. The famous computer giants like IBM, TOSIBA and DELL has also established assembly plants in China.

    To sum up, OEM/ODM has occupied quite a large share in export business and local sale of China enterprises. Taking part in OEM/ODM, China enterprises may acquire a lot of benefit from many aspects. Presently, benefits in the following aspects are especially obvious.

    First of all, taking advantage of the low cost, China manufacturers can enter into the global production system more easily.

    Secondly, China manufacturers can absorb the essence of multinationals and improve their technology level to meet international market challenge.

    Finally, China manufacturers can regulate their production method according to international demand, and enhance their management level.