Why do mobile phone manufacturers produce mobile phones on behalf of factories instead of building their own factories?

OEM may not be noticed by many people. But if you walk on the street, especially in Fujian and Guangdong, you will often see some shops selling original foreign trade orders. On Taobao, there are also many people engaged in the sales of related goods. In other words, OEM is very common in China. So, why do mobile phone brands choose foundries instead of producing them themselves?

First of all, say a slightly professional word, smile curve. This curve is very popular in economics, saying that the value-added products are mainly concentrated in R&D and sales, and the intermediate production links are actually meager. In the mobile phone industry, it can be said that this is particularly obvious. Chip is an important product of R&D. It can be said that even Huawei, a comprehensive mobile phone manufacturer with R&D strength, is restricted, which makes the chip the most expensive mobile phone. The value-added of sales links is mainly reflected in brand building, and big brands sell well when they are expensive.

Second, from the perspective of value chain division, some enterprises are willing to focus on production, that is, OEM; And some mobile phone brands are willing to outsource or contract their own production links, such as Xiaomi, which is the product of the division of labor in the value chain. It's like many chefs, but when you ask him why he doesn't go out to open a restaurant, people say he doesn't want to worry. Conversely, if you ask the restaurant owner why he doesn't cook, people will say, just hire someone.

Third, what are the advantages of mobile phone brands looking for foundries? The most important thing is to save worry and effort, and don't worry about producing this piece. Moreover, due to the scale factor, the cost of the foundry is lower than that of the enterprise itself. When the economy is bad, production outsourcing can also save capital investment and reduce business risks.

In fact, it is not just mobile phones that are OEM, but also many industries. This was unimaginable before. At that time, everything was done by myself. A factory is a hodgepodge at best, and nothing is specialized. Huge asset management, personnel management, fund allocation, so that enterprises are exhausted, the final outcome is to close soon.

With the development of modern enterprises, the required technical content and talents are getting higher and higher, which makes the specialization and intensification of enterprises inevitable, which is popularly called "professional team".

Enterprises need a lot of money and time to build factories, first of all, site selection, then construction, and at the same time, recruiting personnel. The cost of building a factory may exceed the research and development cost of a single product, and such a large amount of manpower, material resources and financial resources are unwilling to be done by ordinary companies.

They have a common idea that professional things should be done by professional teams. After all, a company is not so expert in everything, and your shortcomings are only the advantages of others.

In addition, enterprises are alive. After a factory is built, they need orders, that is, for mobile phones, which orders their own factories simply can't eat enough. The factory could not have a month's holiday last month. If you are in a semi-production state every day, then the result is brain drain and factory closure.

If you place an order for a factory, the factory will be full, and mobile phone manufacturers don't need to spend a lot of money and energy to manage and operate the factory.

Of course, not all mobile phone manufacturers process and produce for others. At present, due to BBK's past industrial reasons, blue-green factories basically produce their own mobile phones, while manufacturers such as Xiaomi and Apple process and produce them for others.

As far as China is concerned, there is also a well-known mobile phone foundry, namely BYD Electronics, a subsidiary of BYD, which produces cars. It is reported that if BYD's production lines are all completed and started, it can produce more than 400 million mobile phones a year.

Personally, OEM is not a bad thing. While saving money and time, mobile phone manufacturers can launch products that meet the requirements, and also give other enterprises living space.

Of course, outsourcing processing is also disgusting. For example, when the United States sanctioned Huawei, Flextronics (an American company), a foundry in Zhuhai, seized 700 million yuan of materials from Huawei, which caused Huawei a lot of economic losses.

Personal opinion, do you agree?

2020- 12-4

First of all, not all mobile phone manufacturers are looking for foundries to produce mobile phones. For example, two brands of mobile phones, OPPO and VIVO, are produced and sold by themselves. In addition, Huawei, ZTE and Samsung also have their own mobile phone factories.

Of course, there are also many mobile phone manufacturers whose mobile phones are produced by foundries, such as Apple and Xiaomi, and some of Huawei's mobile phones are also produced by foundries.

If you set up your own factory, the investment in software and hardware facilities in the early stage and the recruitment of production personnel are all big problems, which need a lot of money and time to solve.

As we all know, the configuration of smart phones is extremely complicated. In addition to the core component chip, there are also requirements for the configuration of screen, camera, processor, CPU, memory and other components. These requirements require many different types of factories to undertake their work. As a smart phone brand company, it has been under great pressure in the smart phone market competition. Under this pressure, they put the company's focus on building core technologies.

Therefore, many smart phone companies with big brands have provided markets for smart phone processing enterprises such as Foxconn, Pegatron, Flextronics and BYD in line with the principle of concentrating on doing big things.

In addition, the current mobile phone OEM giants are mature in technology, and their mobile phone products are reliable in quality and have guaranteed production capacity.

Compared with mobile phone manufacturers' self-built factories, OEM mobile phones have greater cost advantages. Mobile phone manufacturers can also focus on R&D and sales.

Of course, the foundry also has defects. For example, when the United States sanctioned Huawei in 20 19, Flextronics, an American-owned foundry in Zhuhai, seized Huawei's production materials.

With the development of science and technology, smart phones have now spread to everyone's life. We will find that in many domestic mobile phone brands, mobile phones are produced by foundries.

First of all, the mobile phone factory is not just built, and it needs to invest huge capital costs in the early stage. Regardless of the cost of investment in the early stage, the profit problem in the later stage will make mobile phone manufacturers very uncomfortable. After all, without any mobile phone manufacturer, their mobile phones can meet the normal operation of a factory. Only by finding more customers and OEM more other mobile phone products can we achieve the hope of profit. Now it's just a mobile phone with its own brand, which can't meet the needs of the factory at all. Instead, it needs to invest more money to maintain the normal operation of the factory, which has become a burden for mobile phone manufacturers.

For a factory, it is not only the cost of building a factory, but also the need to invest in various equipment requirements in the early stage. More importantly, post-maintenance and personnel salaries need to be balanced in the future. If we only rely on our own products, we can't completely achieve balance, and even need to invest a lot of extra foreign capital to maintain the factory. In the long run, it is not cost-effective. Outsourcing to the foundry not only ensures its own supply demand, but also does not need to invest unnecessary funds, which is more cost-effective for product research and development.

Generally speaking, there is no need for mobile phone manufacturers to build their own factories. After all, there are many domestic manufacturers who don't need to invest unnecessary funds. On the other hand, it is not cost-effective. Our own products can't meet the demand of a factory, but the loss outweighs the gain.

In recent years, when it comes to new 5G mobile phones, a common keyword in consumers' minds is "out of stock", especially domestic mobile phone manufacturers such as Huawei and Xiaomi. Whenever a new mobile phone is released, it is in short supply, which has become the default norm. Although some people say that some manufacturers deliberately hunger for marketing and control the previous mobile phone supply chain, thus creating a very hot feeling, because most new mobile phones are released in the spring of the year, the capacity pressure of mobile phone foundries is really great, and the supply of goods is often not available.

Some people ask, since demand exceeds supply every year, why do mobile phone manufacturers go to foundries instead of building their own factories to produce their own mobile phones? This is because the mobile phone foundry can't be built if you want. Not to mention the huge input cost in the early stage, and the profit problem in the later stage will make mobile phone manufacturers uncomfortable. After all, no mobile phone manufacturer can rely on its own mobile phone capacity to meet the normal operation of a factory. Only by seeking more customers and OEM more mobile phones and other products can we hope to make a profit.

Moreover, for a foundry, it is necessary to continuously invest in the cost of building factories, upgrading production lines and personnel salaries, which leads to greater financial pressure on mobile phone manufacturers and exhausts limited mobile phone R&D funds, which is actually not cost-effective in the long run. If you build your own factory just to ensure output, it may hinder product research and development. Even if the production capacity is no problem, the competitiveness may decline, resulting in a big decline in sales. In this case, it is obviously not worth the loss.

This is actually a cost issue. The self-built factory has invested a lot of money, including building a factory building, building staff quarters, machine production lines, raw material inventory and so on. This requires a lot of financial support, and the cost is much higher than that of the foundry, which can easily lead to poor management! On the other hand, branding is much simpler. It is only necessary to formulate the design scheme and quality standard in the form of contract and hand it over to the foundry. You only need to receive the goods later, and you don't need to take care of anything else. Moreover, foundries will OEM many brands, and the prices of raw materials will be lower. Therefore, for all manufacturers, the cost and efficiency of the foundry are higher, which is an inevitable choice for marketization.

Why do mobile phone manufacturers produce mobile phones on behalf of factories instead of building their own factories?

It's not just about building a factory, it will involve many aspects. Yes, several huge manufacturers basically produce mobile phones by contract. When new machines get together in the peak season, there will be a shortage of supply, but why do they have to produce them by contract?

This field is different.

The OEM we are talking about is generally not just a single product such as OEM mobile phones, but many other products, and many mobile phone manufacturers are not traditional manufacturers, which will lack details in this regard, followed by OEM and sales of mobile phones. They are two different fields, and the most basic thing is quality, which is the most important among mobile phone manufacturers. Look at Samsung, because the battery of note7 blew up Samsung's share in China. The assembly process is not very good, and finding a foundry can solve this problem well, because the foundry is already the most familiar with mobile phones, and the probability of product accidents is the smallest.

Cost consideration

Yes, this is the cost. Although mobile phone manufacturers seem to be rich, their own production costs are not small. First of all, you have to choose the right land and discuss it with the local government. Otherwise, the place given is very biased and people don't want to go. How can it be produced? Secondly, it is personnel. It doesn't seem important, but it is. The people who build their own factories must be fully equipped, but it will be difficult for novices to adapt quickly, and digging people will increase costs.

quality

This is the most important part. It is the hardest to control the quality of the factory rashly. After all, everything is a new beginning. The proficiency of personnel, the operation of machines and the quality of products will affect the follow-up sales of mobile phones, and they cannot be recalled because of quality problems. This is not only the cost, but also the most serious damage to word of mouth.

This should be more of a cost issue!

After all, there are many problems to be considered when building a factory, such as the site selection of the factory, personnel management in the later period, personnel training and maintenance of manufacturing equipment, product warehousing and logistics, etc. Each item can be said to be very complicated, and it can not be solved only by investing money.

Generally, few manufacturers can produce products only by one production line, and an ecological chain is only composed of many manufacturers. Come and listen to my answer, I hope I can help you.

First of all, although R&D and mobile phone manufacturing are closely related, they are also very different. In fact, not only mobile phones, laptops, tablets and other digital devices are produced by foundries.

As a highly integrated industry, mobile phones are an industry that assembles accessories provided by many suppliers. Mobile phone manufacturers are responsible for hardware design and development, software system development and optimization, assembly or delivery to foundries.

Because many foundries have deep technical accumulation in this field, especially big factories like Foxconn will continue to develop many new processes and technologies. Many mobile phone manufacturers say that new hardware manufacturing processes or technological changes are usually developed by foundries or suppliers, not mobile phone manufacturers.

On the other hand, many mobile phone manufacturers are unable to build their own factories and need a lot of manpower, hardware facilities and factory space. Not to mention the accumulation of good technology.

To put it bluntly, it is a thankless thing for mobile phone manufacturers to build their own factories as an airplane. Many problems can be solved by the foundry, and you don't need to be in charge all the time. As long as you give the money to the foundry, you can have the rest. In this way, mobile phone manufacturers can be fully responsible for research and development. Both sides do their jobs, so why not?