China produces 30% of the world’s goods. Whatever you have invented, there is a good chance that quite a few factories in China can make your idea a reality. In addition, they probably offer a lower cost than factories in other parts of the world. A search online would probably give you hundreds, and maybe thousands of factories to choose from.
Trying to sort through those factories and whittle down whom to work with, can be overwhelming.
Don’t worry. Here are five criteria you can use to make choosing a factory simple.
Contract Manufacturer
The first step in finding a factory is to understand exactly what you are seeking. Your goal is to find a Contract Manufacturer. This is different than a factory that is wholly owned by a specific company and makes only their products. An example of a wholly owned and dedicated factory would be a Fiat Chrysler automobile factory operated by Fiat Chrysler to make Fiat Chrysler cars. You can’t just call them up and ask them to produce your new “always-hot-coffee-mug.”
Contract Manufacturers are different. These are factories that you can hire to manufacture your products, under your name, with your designs, using their machinery and their workers. This is referred to as an OEM factory (Original Equipment Manufacturer.) An OEM factory may produce laundry baskets during one week, cat litter trays the next week, and plastic stools the week after that. Each for a different company that hired them. All produced with the same machinery.
In addition to manufacturing products under contract for different companies, these factories may also manufacture products on their own. Products that are designed by their own internal staff, and sold under their own name, or perhaps under no name (White Label,) or perhaps under a client’s name (Private Label.) This type of manufacturing is known as ODM (Original Design Manufacturing.)
In my experience I always look for factories that do both ODM and OEM. A big advantage of hiring a factory that does both is that you can examine their existing ODM products to evaluate the quality and range of the products coming off their assembly lines.
You now have the first requirement for your list of criteria you’ll use to choose and narrow down a factory.
- The factory should be an OEM Contract Manufacturer that also produces ODM products.
Factory Experience
We can add a second requirement by adding the obvious and often-overlooked criteria that they produce items like your invention. If you are looking to manufacture a new unique type of kitchen timer you wouldn’t hire a factory that creates memory foam pillows. You’d hire a factory that makes timers.
However, choosing a factory when your invention combines multiple types of products, may become confusing. Let’s say that you are creating a dog collar with integrated Bluetooth speaker. Should you choose a dog collar factory or a Bluetooth factory?
Begin by comparing the modifications that will be made to each of the components. Can one component be procured without much modification, or possibly off-the-shelf? Does one component require customized manufacturing or possibly a completely new design? Focus your search on the complicated customization. For the Bluetooth dog collar, let’s assume you haven’t reinvented the Bluetooth speaker, you merely need a very small sized unit. Your innovation is the way the fabric and webbing of the collar surrounds the speaker, protects it, and keeps it comfortable for the dog. Hire the collar factory, and (after protecting your IP) work closely with their engineers to bring Fido’s favorite tunes to him wherever he wanders.
Your requirements list would now look like:
- The factory should be an OEM Contract Manufacturer that also produces ODM products.
- The factory should manufacture ODM products similar to your OEM product. If you know the specific materials required, then you can add them here.
Factory Location
In the 1980’s China invested in developing manufacturing zones – a form of Specialized Economic Zone (SEZ.) These were areas within certain cities and provinces centered on specific product and manufacturing categories. Manufacturing opportunities flourished within those zones and supportive infrastructure and a skilled labor base grew around them.
As a result, the best manufacturing options for your product can often be found within specific geographic areas of China. Here’s a short list as an example. You can find more detailed lists online.
- Bedding, Bed Sheets: Jiangsu Province, Zhejiang Province, Guangdong Province
- Clocks, Watches & Optical Instruments: Guangdong Province, Jiangsu Province, Zhejiang Province
- Consumer electronics: Guangdong Province, Shenzhen, Guangzhou
- General Ceramics: Guangdong Province, Jiangxi Province, Shandong Province
- Garden Tools: Jiangsu Province, Shandong Province, Zhejiang Province
- Gifts and Premiums: Guangdong Province, Shanghai, Zhejiang Province
- Health supplements: Guangdong Province
- Household Items: Fujian Province, Guangdong Province, Zhejiang Province
- Kitchenware & Tableware: Fujian Province, Guangdong Province, Zhejiang Province
- Leather Cases and Backpacks: Guangdong Province, Zhejiang Province, Fujian Province
- Apparel: Guangdong Province, Jiangsu Province, Zhejiang Province
- Sports equipment: Guangdong Province, Fujian Province, Zhejiang Province
- Personal Care Products: Guangdong Province, Shanghai, Zhejiang Province
- Pet Products & Food: Shandong Province, Jiangsu Province, Guangdong Province
- Polyresin: Fujian Province, Guangdong Province, Zhejiang Province
- Semi-finished and Spare Parts: Guangdong Province, Jiangsu Province, Zhejiang Province
- Shoes: Fujian Province, Guangdong Province, Zhejiang Province
- Home Textiles: Guangdong Province, Jiangsu Province, Zhejiang Province
- Toiletries: Shanghai, Guangdong Province, Zhejiang Province
- Toys: Guangdong Province, Jiangsu Province, Shandong Province
- Water Sports equipment: Guangdong Province, Shandong Province, Zhejiang Province
- Wooden Toys: Guangdong Province, Zhejiang Province
- Metal Work: Guangdong Province, Zhejiang Province, Jiangsu Province
Your requirements list should now look like this:
- The factory should be an OEM Contract Manufacturer that also produces ODM products.
- The factory should manufacture ODM products similar to your OEM product. If you know the specific materials required, then you can add them here.
- The factory should be located within its appropriate development zone.
Factory Size
What is the right size factory for an invention coming to market for the first time? You don’t want a factory that is too large or too small. Large factories rarely take on clients with new unproven products. Small factories are eager to take on new clients, but may also have financial stability issues or challenges making large quantity orders.
To prepare for this article I looked over my personal notes from almost twenty years working with Chinese factories. From my personal experience, most of the factories that worked best when I first launched products had between 100 and 350 workers. Other people may have different experiences, but in my opinion, a good factory to begin with would be between 100 and 350 workers. This is a guideline and not a rule. It worked well for me, and I hope my good fortune continues to you.
The caveat with smaller factories this size is that you will eventually outgrow them. If your product is good, you’ll be dealing with large orders faster than you would imagine.
Here’s your list so far.
- The factory should be an OEM Contract Manufacturer that also produces ODM products.
- The factory should manufacture ODM products similar to your OEM product. If you know the specific materials required, then you can add them here.
- The factory should be located within its appropriate development zone.
- The factory should have 100-350 workers.
Not a Trading Company
The final consideration is a negative criterion. As an inventor, you should avoid trading companies.
Trading companies (also known as resellers) may masquerade as factories. Trading companies buy products from factories and resell them. Sometimes they have equipment to assemble products, or to print company names and logos. But in general, they don’t have machinery to manufacture products, and they don’t have a skilled workforce. Their focus is on sales.
Because they are focused on sales, and are sometimes aggressive, they often try to convey to unsuspecting people (like inventors) that they are factories. Not just resellers.
The trading company may say outright that they are a factory, they may say they have sister factories, or they may say that they “can make anything.” However, if you hire them to produce an OEM product, they will simply hire an actual OEM factory, pass on the costs, and pretend they are doing the work themselves.
It may be tempting to accept the higher cost in order to gain convenience, but for inventors, there are three strong reasons to avoid them.
- Intellectual Property Protection is critical to inventors. Legal agreements, including IP protection, flow downstream. The OEM factory hired by the trading company is considered upstream. Therefore, the factory creating your invention (hired by the trading company) may not know that they are prohibited from selling your product design to other businesses. Trading companies rarely require IP protection agreements from the factories they hire. One day you may find your product being sold online by someone else. The factory may have sold it to other clients in good faith. This occurs because the IP protection agreements you signed applied to the trading company, not the factory.
- The trading company is a middleman. They have expenses and need to make a profit. As a result, they will add additional fees to every unit you purchase, every mold that needs to be made, and every other fee passed on to them by the factory. Pennies count when you’re a small startup, and higher product costs mean lower profits for you.
- Trading companies will hide the real name of the factory while telling you that they manufacture the goods. This will cause problems when you start selling to large retailers. Retailers frequently require onsite factory reviews and audits. At a minimum, they may need the name of your factory. If you are using a trading company, you’ll inadvertently give false information to your retailer. Another problem occurs when the trading company switches OEM factories. You’ll end up with inconsistent products, and perhaps quality issues, without a clear explanation since to your eyes, the factory has not changed.
The consequences of these three risky situations are too high, so just avoid them.
Here’s your final list.
- The factory should be an OEM Contract Manufacturer that also produces ODM products.
- The factory should manufacture ODM products similar to your OEM product. If you know the specific materials required, then you can add them here.
- The factory should be located within its appropriate development zone.
- The factory should have 100-350 workers.
- The factory should not be a trading company.
Using these criteria, you should be able to narrow down the hundreds (or more) of factories you find online to a manageable dozen or so.
Contact them, ask for samples of their current ODM products that are like yours, evaluate the quality, their communication, and responsiveness. Congratulations, you are on your way.
I’ll be sharing more articles about how to evaluate prices without giving away your IP, and the best ways to find factories, so come back soon.
Contract Manufacturing – https://en.wikipedia.org/wiki/Contract_manufacturer
Manufacturing Development Zones – https://en.wikipedia.org/wiki/Special_economic_zones_of_China
OEM and ODM Manufacturing – https://seller.alibaba.com/businessblogs/pxpl2vs9-oem-vs-odm-manufacturing-whats-the-difference
